COMMISSIONER OF CENTRAL EXCISE Vs. KABSONS INDUSTRIES LTD.

JUDGEMENT

(1.) This appeal was filed by the department against two findings of the lower appellate authority. The original authority had confirmed a demand of duty of Rs. 7,188/ - against the assessee on certain goods, which were found to have been clandestinely removed. It had also disallowed MODVAT Credit of Rs. 25,832/ - to the assessee in respect of CRCA sheets used as conveyor belt. It had also imposed a penalty of Rs. 33,020/ - (Rs. 7,188 + Rs 25,832/ -) on the party under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944. It had also ordered for recovery of interest on duty under Section 11AB . Another demand of duty of Rs. 19,403/ - was dropped by the authority, against which no appeal was filed by the department. In an appeal filed by the assessee, the learned Commissioner (Appeals) upheld the demand of duty of Rs. 7,188/ - but set aside the proposal for recovery of MODVAT Credit of Rs. 25,832/ -. The appellate authority also reduced the quantum of penalty to Rs. 2000/ -. The present appeal of the Revenue is against the grant of MODVAT Credit of Rs. 25,832/ - to the assessee and against reduction of the quantum of penalty.

(2.) The learned SDR has reiterated the grounds of this appeal.

(3.) The learned S.D.R. has argued that the mandatory penalty under Section 11AC could not have been reduced by the lower appellate authority on the facts of this case. Where the demand of duty of Rs. 7,188/ - was confirmed against the assessee and ordered to be recovered under the proviso to Section 11A(1) of the Central Excise Act, 1944, there was no room for imposition of a lesser amount of penalty. It has also been submitted that no reduction of penalty was warranted in this case on the ground of the amount of duty having been paid prior to issuance of the show -cause notice. In this connection, the learned S.D.R. has relied upon the Hon'ble Supreme Court's ruling in Union of India v. Rajasthan Spinning & Weaving Mills : 2009 (238) ELT 3 (SC). He has also placed reliance on the Hon'ble Bombay High Court's judgment in Commissioner of Central Excise & Customs v. Shri Ram Aluminium Pvt. Ltd., 2009 (242) ELT 202 (Bom). It is urged that the penalty on the respondent under Section 11AC of the Act be enhanced to Rs. 7,188/ -.