1989 (7) TMI 231 - AT - Central Excise

Summary

Issues:
1. Imposition of penalties under the Central Excise Act on the applicants for manufacturing switches without the aid of power.
2. Withdrawal of exemption for switches from 1-3-1988 without proper intimation to the applicants.
3. Justification of penalties based on the classification list for non-dutiable goods.
4. Allegation of suppression or clandestine removal of goods without payment of duty.

Analysis:

1. The applicants, M/s. Ashok India Engg. Works, were required to deposit penalties imposed on them under the Central Excise Act. The consultant representing the applicants argued that there was no justification for the penalties as the firm manufactured switches without the aid of power, which were exempted. The department had been informed about this through various correspondences and advised the applicants to keep such activities in a separate premises.

2. The exemption for switches, even if manufactured without the aid of power, was withdrawn from 1-3-1988 without proper intimation to the applicants. Upon discovering this, the firm offered to pay the duty for the period after the withdrawal of the exemption. The penalties were imposed on them despite their proactive approach to rectify the situation, leading to financial strain on the firm.

3. The respondent argued that the switches should have been mentioned in the classification list for non-dutiable goods if they were exempted. The absence of such mention was used to justify the imposition of penalties. However, the Tribunal noted that the mere absence of mention in the classification list does not necessarily imply suppression or clandestine removal of goods.

4. After considering the arguments from both sides, the Tribunal found that there was no deliberate withholding of information or clandestine removal of goods by the applicants. Citing a Supreme Court case, the Tribunal emphasized that suppression can only be alleged when there is a conscious or deliberate withholding of information. As there was no evidence of such behavior, the Tribunal granted an unconditional stay on the recovery of penalties imposed on all four applicants.

In conclusion, the Tribunal found that the penalties imposed on the applicants were unjustified given the circumstances surrounding the withdrawal of the exemption for switches. The Tribunal emphasized the importance of timely action by the department and the lack of evidence supporting allegations of suppression or clandestine removal.