COMMISSIONER OF CENTRAL EXCISE Vs. SARAVANA SPINNING MILLS

JUDGEMENT

(1.) THIS is an appeal filed by the Revenue against the Order -in -Appeal No. 405/04 dated 22.11.2004 passed by the Commissioner (Appeals), Salem.

(2.) BRIEF facts of the case are as follows: Order -in -Original No. 114/04 dated 30.6.04 was issued adjudicating a case of short levy of duty for removal of cotton yarn for sale through consignment agent by M/s. Saravana Spinning Mills, Dharmapuri. In the Order -in -Original the lower authority confirmed duty amount of Rs. 2,51,557/ - He also demanded interest of Rs. 22,973/ - due under Section 11AB of the Act and also imposed equal amount of penalty under Section 11AC of the Central Excise Act, 1944. Aggrieved by this order, the assessee filed appeal before the Commissioner (Appeals). In the Order -in -Appeal, the lower appellate authority has vacated the penalty imposed under Section 11AC and imposed a penalty of Rs. 25,000/ - under Rule 25 of the Central Excise Rules, 2002. The party paid all the dues as per orders of the original authority. The present appeal filed by the Revenue is seeking to restore the penalty imposed by the original authority under Section 11AC ibid.

(3.) I have heard both sides and perused the records. There is no dispute that the assessee had short paid Rs. 2,71,557/ - while clearing cotton yarn from their factory for sale through consignment agent during the period April 2003 to January 2004. They had admittedly adopted lower value compared to the corresponding sale price of such goods sold by the consignment agent on the date of removal of the goods from the factory. Though show cause notice had demanded duty invoking proviso to Section 11A(1), no ground to justify the said sub -section was indicated in the show cause notice. This point was highlighted by ld. Counsel for the respondents. In the impugned order, the lower appellate authority relied on the decision of the Supreme Court in CCE v. HMM Ltd. and set aside the penalty imposed under Section 11AC. He imposed penalty of Rs. 25,000/ - instead as the goods had been cleared in contravention of rule without paying the full value of duty.