VARUN FABS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) After examining the records and hearing both sides, I find that the appellants have a fairly strong case and accordingly, I admit the appeal.

(2.) The stay application is also being taken up. In this application the prayer is for waiver of pre -deposit and stay of recovery in respect of an amount of penalty of Rs. 17,500/ - imposed by the lower authorities on the applicants under Rule 173Q of the Central Excise Rules, 1944. The allegation raised by the department in the show cause notice was that the applicants had made clearances of their final product by paying duty by cheques issued to the Chief Accounts Officer of Central Excise, Chandigarh without maintaining sufficient balance in their PLA. Similar show cause notices were issued to a large number of other manufacturers also. The adjudicating authority accepted the department's proposal to impose penalties on all such manufacturers under Rule 173Q and, accordingly, imposed a total penalty of Rs. 2,46,500/ - on all manufacturers (including the present applicants) collectively. The annexure to the order of the original authority showed the breakup of this penalty, according to which the penalty imposed on the present applicants was Rs. 17,500/ -. In the appeal preferred by the applicants against the order of the original authority, the Commissioner (Appeals) upheld the penalty.

(3.) Ld. Counsel for the applicants submits that, admittedly, there was enough amount in the applicant's bank account when the duty payment cheques were received by the Chief Accounts Officer of Central Excise and the cheques were honoured. In the circumstances, Counsel submits, there could be no finding of mens rea against the applicants to attract the penal provisions of Rule 173Q. Counsel claims that the applicants have a strong prima facie case in view of the decision of the Andhra Pradesh High Court in the case of Sanghi Polyesters Ltd. v. CCE [2001 (134) E.L.T. 344 (AP)] and the decision of Government of India (as revisipnary authority) in the case of Sahara Airlines [2000 (117) E.L.T. 802]. Ld. SDR opposes this claim and submits that the allegation of the department in this case was that the applicants had not maintained sufficient balance in their PLA. She submits that this allegation has not been successfully rebutted by the party.