2004 (2) TMI 486 - AT - Central Excise

Summary

Issues:
- Violation of provisions of the Sugar Export Promotion Act, 1958
- Imposition of penalty under Rule 25 of the Central Excise Rules, 2001

Analysis:
- The appeal was against an order-in-original by the Commissioner of Central Excise concerning a violation of the Sugar Export Promotion Act, 1958. The Commissioner dropped the duty demand but imposed penalties on the appellant Sugar factory and another company under Rule 25 and Rule 26 of the Central Excise Rules, 2001, respectively. The penalties were imposed due to alleged contravention and diversion of sugar meant for export to home consumption.

- The appeal was filed by the sugar factory challenging the penalty imposed under Rule 25. It was argued that since the exporter had paid additional duty on the sugar as per the provisions of the Sugar Export Promotion Act, 1958, it implied that the sugar meant for export was diverted for home consumption. The order noted that the exporter had not executed any bond to comply with excise provisions, leading to the establishment of contravention with intent to evade duty. Thus, the imposition of penalty under Rule 25 on the appellants was considered justified.

- The merchant exporter admitted liability for additional excise duty due to failure to export, and the duty demand against the appellants was dropped by the Commissioner under the Sugar Export Promotion Act, 1958. The merchant exporter was separately penalized for the failure to export. The responsibility to export lay with the exporter, and the sugar clearance from the factory was done after paying the appropriate excise duty. Since there was no evidence that the appellants claimed back the duty without exporting, the imposition of penalty on them was deemed unsustainable and set aside.

- After hearing both sides, the judgment set aside the impugned order and allowed the appeal, providing consequential relief as per the law. The decision highlighted the distinction between the responsibilities of the exporter and the appellants, ultimately leading to the setting aside of the penalty imposed under Rule 25 of the Central Excise Rules, 2001.