2000 (12) TMI 339

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..... payment of duty. When these defects were detected, the assessee was issued Show Cause Notice. He paid duty on 62,983 ltrs., diverted for other purposes. In the Adjudication proceedings, Dy. Commissioner levied Central Excise Duty amounting to Rs. 73,971/-, being the duty realisable on 1,980 ltrs. short received by the assessee and 62,983 ltrs. diverted for other use. Invoking the provisions contained in Section 11AC of the Central Excise Act, an equal amount was imposed as penalty. Rs. 20,000/- was also levied as penalty under Rule 173Q of the Central Excise Rules. Adjudicating Officer also directed the assessee to pay a sum of Rs. 5,080/-, being the duty on the Cotton Yarn sold illegally. The order passed by the Adjudicating Authority was .....

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..... on the facts and circumstances of this case. Assessee was getting the HSD Oil presumably in conformity with the provisions contained in Rule 192. In such a situation, the liability to duty is governed by the provisions contained in Rule 196. Rule 196(1), inter alia, states that if any excisable goods obtained under Rule 192 are not duly accounted for as having been lost or destroyed by natural cause or by unavoidable accident during the transport from the place of procurement or from the appellant s premises or during handling or storage in the premises approved under Rule 192 applicant shall, on demand by the proper Officer immediately pay the duty liable on such goods. The Bond executed by E.O.U. and the scheme of the Rules prove that if .....

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..... ination of duty payable by a person on whom notice under Sub-section (1) of that Section has been issued. Section 11A thus contemplates a situation where duty has not been leviedor paid or has been short-levied or short-paid and consequently a decision is arrived at on the duty leviable. In this case, no such situation contemplated by Section 11A has come into existence. This is more so because the noticee in this case was not the manufacturer of H.S.D. Oil. Hence, the duty liability which has been imposed on the assessee cannot be taken as a levy coming under Section 11A(2) of the Act. Viewed in this perspective, the imposition of penalty under Section 11AC was not proper. The penalty imposed under that section amounting to Rs. 73,971/- is .....

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