CROMPTON GREAVES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) After examining the records and hearing both sides, I find that the short question arising for consideration is whether the appellant is liable to be penalised under Section 11AC of the Central Excise Act read with Rule 25 of the Central Excise Rules, 2002 on the facts of this case During the period of dispute (31.7.02 to 9.5.04) the appellant had cleared their product to 100% Export Oriented Units by following the procedure laid down in Circular No. 579/16/01 CX dated 26.6.01 issued under Sub -rule (2) of Rule 20 of the Central Excise Rules, 2001. The Central Government had by Notification 47/01/CE(NT) dated 26.6.01 extended the facility of clearance of excisable goods from factory to warehouse or warehouse to warehouse without payment of duty, to specified goods including the appellant's product. The conditions, limitations, safeguards and procedures for removal of such goods were laid down by CBEC in the aforesaid Circular. According to such procedure, the appellant could remove their product to the EOUs without payment of duty, under cover of prescribed documents and on the strength of a certificate issued by the proper officer of Central Excise having jurisdiction over the buyers (EOUs). The Board's Circular further stipulated that a consignor should receive the duplicate copy of the warehousing certificate duly endorsed by the consignee within 90 days from the date of removal of the goods and, if the warehousing certificate was not received within this period or within such extended period as might be allowed by the Commissioner, the consignor shall pay appropriate duty leviable on such goods. In the instant case, it appears from the records that, in respect of a certain consignment, the warehousing certificate of the proper officer of Central Excise having jurisdiction over the EOUs were not received by the appellant within the stipulated period. Upon detection of this fact, a show -cause notice was issued to the appellant demanding duty of over Rs. 23 lakhs from them under Section 11A of the Act, charging interest thereon under Section 11AB of the Act and proposing penalty on the noticee under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Act. These proposals were contested. In adjudication of the dispute, the original authority confirmed demand of duty to the extent of Rs. 2,06,491/ - against the assessee with interest thereon. It also imposed equal amount of penalty on the party. An amount of Rs. 1,63,192/ - already paid by the assessee was appropriated towards the above demand. In an appeal filed by the assessee, the Commissioner (Appeals) sustained the demand only to the extent of Rs. 1,63,192/ - and also noted that the amount had already been voluntarily paid. As regards penalty, the ld. Commissioner (Appeals) held as follows: "Penalty of Rs. 1,63,192/ - is further confirmed under Section 11AC read with Rule 25 of the C.Ex. Rules, 2002." In the present appeal of the assessee, there is no challenge against the demand of duty which has already been honoured. The challenge is against the penalty.

(2.) Elaborating the relevant grounds of appeal, the counsel for the appellant submits that the above penalty does not conform to the requirement of Section 11AC or Rule 25. It is submitted that many of the provisions of Rule 25 are not applicable to the facts of this case and that there is neither any allegation nor any finding against the appellant in the orders of the lower authorities which could support a penalty under Clause (d) of Sub -rule (1) of Rule 25, the only provision which could conceivably be invoked. Elaborating the point, the ld. Counsel submits that there is no finding, against the assessee, of contravention of provisions with intent to evade payment of duty and therefore penalty under Rule 25 is ruled out. On the other hand, it is submitted by the ld. SDR that, where a warehousing certificate was not received within the stipulated period, it was incumbent upon the appellant to discharge duty liability on the goods cleared to the EOUs. That liability was discharged belatedly and, that too, when the omission was pointed out by the department. In the circumstances, it is argued that the appellant should be held to have contravened the provisions of law with intent to evade payment of duty.