2001 (5) TMI 232 - AT - Central Excise

Summary

Issues involved:
Whether penalty under Rule 209A of the Central Excise Rules is imposable on the appellant.

Detailed Analysis:

1. Issue of Imposition of Penalty under Rule 209A:
The appeal involved the question of whether the penalty under Rule 209A of the Central Excise Rules could be imposed on the appellant. The appellant argued that since they had not received the fabrics in question, they had no knowledge or reason to believe that the goods were liable for confiscation. They also contended that the imposition of penalty was discriminatory as other customers in similar situations were not penalized. Additionally, they relied on legal precedents, such as the decision of the Delhi High Court in Pioneer Silk Mills Pvt. Ltd. v. U.O.I., to support their case that penalty could not be imposed under the Additional Duties of Excise Act, 1957. The appellant further argued that the amendment made in 1994 could not be applied retrospectively, citing the Supreme Court's decision in CCE v. L.G. Equipments.

2. Validity of Imposition of Penalty:
The Department, represented by Shri R.C. Sankhla, contended that the Tribunal had remanded the matter to the Commissioner, indicating that the earlier order was a draft order and not a final order of adjudication. Therefore, the Department argued that proceedings against the appellant could be initiated regardless of whether the Department had filed an appeal against the non-imposition of penalty in the earlier order. The Department alleged collusion between the appellant and another party, suggesting that the appellant had conscious knowledge of the goods being liable for confiscation, justifying the imposition of the penalty.

3. Judgment and Legal Analysis:
After considering the arguments presented by both sides, the Tribunal focused on the nature of the duty involved, which was additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Citing the decision of the Delhi High Court in Pioneer Silk Mills, the Tribunal concluded that there was no provision in the Additional Duties Act authorizing the imposition of a penalty. The Tribunal emphasized that the provisions of the Central Excise Act related to penalties were not applicable to the Additional Duties Act. Relying on legal precedents and the Supreme Court's ruling in LG Equipments Ltd., the Tribunal set aside the penalty imposed on the appellant, aligning with the decision of the Delhi High Court in Pioneer Silk Mills. Consequently, the appeal was allowed in favor of the appellant.

In conclusion, the judgment clarified the legal aspects surrounding the imposition of penalties under the Central Excise Rules and the Additional Duties of Excise Act, emphasizing the need for statutory authority to levy penalties. The decision underscored the importance of adherence to legal provisions and precedents in determining the validity of penalties in excise duty cases.