COMMISSIONER OF CENTRAL EXCISE Vs. NAGREEKA EXPORTS LTD.

JUDGEMENT

(1.) REVENUE has filed this appeal against the dropping of penalty under Section 11AC following the ratio of Machino Montell v. CCE : 2004 (168) ELT 466 (Tri -LB) and Rashtriya Ispat Nigam Ltd. v. CCE : 2003 (161) ELT 285 (Tri) by the Commissioner (Appeals).

(2.) THE facts of this case are that the respondent is 100% EOU and engaged in the manufacture of excisable goods i.e. cotton yarn and knitted fabrics. It was observed that the respondents have not paid the appropriate duty leviable on the knitted fabrics sold in Domestic Tariff Area and thereby it was arrived that short paid duty to the tune of Rs. 3190/ - and by provisions of Notification No. 2/95 -CE , the respondents were found to have failed to pay appropriate duty leviable under proviso of Section 3(i) of the Central Excise Act, 1944 on cotton yarn manufactured by utilizing imported material 'Lycra' and sold in Domestic Tariff Area (DTA) and thereby have short paid duty to the tune of Rs. 54,641/ - on the goods removed during the period from 18.11.2002 to 1.5.2004. Duty demand was confirmed along with interest and penalty. On an appeal, the Commissioner (Appeals) reduced the duty demand to Rs. 22,898/ - and dropped the proceedings of penalty and interest. Aggrieved from the same, the Revenue is before me.

(3.) ON the other hand, Ms. Aparna Hirandagi appeared on behalf of the respondent and submitted that it is a case of 100% EOU and moreover the show -cause notice demanded the duty of Rs. 54,641/ - and original adjudicating authority has also confirmed the same but the Commissioner (Appeals) after examining the records reduced the differential duty to Rs. 22,818/ -. In that event, it cannot be said that there was any intention of the respondent to evade the payment of duty and in that circumstances, the penalty cannot be imposed under Section 11AC. She further submitted that they have contended before the adjudicating authority that the show -cause notice is time barred and no finding was given by the adjudicating authority on that issue also. She further submitted that if the penalty is to be confirmed in that case the respondents be given an option to pay 25% of the penalty within 30 days. To support her contention, she placed reliance on the following decisions: