1990 (11) TMI 254 - AT - Central Excise

Summary

Issues:
Appeal against imposition of penalty under Rule 173Q of the Central Excise Rules for removal of Motor Vehicles without payment of duty.

Detailed Analysis:

1. Imposition of Penalty:
The appeal was filed against the penalty imposed by the Additional Collector of Central Excise for removing 18 Motor Vehicles without paying duty initially. The appellant argued that they built bodies on duty-paid chassis, falling under Tariff Heading 8707, and thus, duty was not applicable. They voluntarily paid the duty before any notice from the Department. The Department issued a demand notice alleging removal without duty payment, leading to the penalty imposition. The appellant contended that penalty was unjustified, citing various legal precedents supporting their case.

2. Department's Argument:
The Departmental Representative argued that the duty was paid only after the Department initiated investigations, justifying penalty under Rule 173Q(1)(a) without requiring mens rea for the offense. Despite the subsequent duty payment, the initial offense of removal without payment warranted the penalty. The Additional Collector had considered the leniency in imposing a penalty lower than the duty amount.

3. Judicial Consideration:
The Tribunal reviewed the legal arguments and cited judgments. While acknowledging the favorable judicial decisions on classification, the Tribunal noted that the appellant's non-payment of duty was not due to conscious reliance on those decisions. The appellant's subsequent duty payment was influenced by the Department's inquiry, not a show cause notice. The Tribunal analyzed various legal precedents, including cases like Tata Oil Mills, Dabur Pvt. Ltd., Sarada Industries, and Hindustan Steel Ltd., emphasizing that penalty imposition requires deliberate defiance of law or contumacious conduct.

4. Tribunal's Decision:
The Tribunal concluded that the appellant's duty payment post-inquiry was not indicative of malafide intent. The appellant's actions did not demonstrate a deliberate violation but rather an oversight. Despite the removal without duty payment, the Tribunal considered the classification disputes and legal precedents supporting bonafide belief or technical breaches. The Tribunal extended leniency, setting aside the penalty imposed by the Additional Collector.

In summary, the Tribunal allowed the appeal, emphasizing the absence of deliberate defiance of law and the appellant's compliance post-inquiry. The decision highlighted the significance of bonafide belief, technical breaches, and the classification disputes in setting aside the penalty under Rule 173Q of the Central Excise Rules.