1989 (2) TMI 272 - AT - Central Excise

Summary

Issues:
- Imposition of penalty under Section 173Q(1) of the Central Excise Rules, 1944 for intentional evasion of excise duty.
- Competence of the Superintendent of Central Excise to impose penalty and the Collector's authority to initiate penal proceedings.
- Legal validity of the penalty imposition and the procedural aspects of penalty assessment.

Analysis:
1. Imposition of Penalty under Section 173Q(1): The case revolved around the imposition of a penalty on the appellants for intentional evasion of excise duty under Section 173Q(1) of the Central Excise Rules, 1944. The appellants, manufacturers of aluminium cables, were found to have received excess amounts from two entities without notifying the Central Excise authorities or amending their price list to reflect the escalation charges collected. The evasion was detected during an account verification in 1985, leading to the payment of the due duty by the appellants. The Collector initiated penal proceedings based on the suppression of excess amounts, culminating in the impugned order imposing a penalty of Rs. 7,000.

2. Competence of Authorities and Procedural Validity: The arguments presented by both parties focused on the competence of the Superintendent of Central Excise to impose penalties and the Collector's authority to initiate penal actions. The appellants contended that since the duty was paid promptly after detection and assessments were made by the Superintendent, the penalty imposition was unwarranted. On the other hand, the Respondents argued that intentional evasion of duty warranted penal consequences, emphasizing the Collector's power to institute proceedings even after a lapse of two years.

3. Legal Validity of Penalty Imposition: The Tribunal analyzed the circumstances and legal provisions in detail. It noted that while the appellants' conduct was culpable, the Superintendent had not exercised his discretion to impose penalties when assessing the RT-12 returns. The Tribunal highlighted that the Superintendent's quasi-judicial powers included the authority to impose penalties, and the lack of penal action for over two years indicated a favorable exercise of discretion towards the appellants. The Tribunal emphasized that the Collector could not review the Superintendent's decision and initiate separate penal proceedings without proper justification.

4. Conclusion: Ultimately, the Tribunal found that the imposition of the penalty was not sustainable under the law due to procedural irregularities and the Superintendent's discretion in not imposing penalties initially. The Tribunal set aside the impugned order and allowed the appeal, emphasizing the importance of adherence to procedural norms and the exercise of quasi-judicial powers by the competent authorities.