CCE Vs. PIONEER CHEMICALS

JUDGEMENT

(1.) This is an appeal by the Revenue against order -in -appeal No. 117 -CE/APPL/KNP/99 dated 28/03/07 passed by CCE (Appeals), Kanpur, by which the Commissioner (Appeals), dismissed the Department's review appeal for enhancement of the quantum of penalty imposed on the Respondent by the Assistant Commissioner vide order -in -original dated 29/12/05.

(2.) The Jurisdictional Central Excise Officers visited the Respondent's factory on 07/08/04 and conducted physical stock taking of the finished goods as well as raw material on which Cenvat credit had been taken. In respect of stock of cenvated raw material there was shortage of 400 kgs. of pigments and 1295 kgs. of solvent involving duty of Rs. 15,404/ -. The respondent paid the entire duty on the shortage of cenvated inputs. Thereafter a show cause notice was issued to the Respondent for confirming the demand of Rs. 15,404/ - and also imposition of penalty on them under Rule 13(2) of Cenvat Credit Rules, 2002 read with Section 11AC of Central Excise Act, 2004. The Assistant Commissioner vide order -in -original dated 29/12/05 confirming the demand and ordering the appropriation of amount paid towards the same, imposed of penalty of only Rs. 2,500/ - on the Respondent under Rule 13(2) of Cenvat Credit Rules, 2002. The Commissioner reviewed and Assistant Commissioner's order for enhancement of penalty to the amount equal to the duty evaded but the Commissioner (Appeals) vide the impugned order -in -appeal dated 28/03/07 dismissed the Department's review appeal on the ground that the entire duty in this case had been paid prior to the issue of show cause notice. In arriving at this conclusion, the Commissioner (Appeals) relied upon -

(3.) I have carefully considered the submissions of the learned Departmental Representative and have perused the records. At the time of officer's visit to the Respondent's factory, shortage of raw materials has been found for which no explanation had been given. The Respondent have accepted the shortage and paid entire amount of duty much before the issue of show cause notice. The point of dispute is as to whether in these circumstances, the penalty equal to the amount of duty as per provisions of Section 11AC should be imposed or the penalty of Rs. 2500/ - imposed by the Assistant Commissioner and upheld by the Commissioner (Appeals) is sufficient. I find Commissioner (Appeals)'s decision is based on the Tribunal's decision in the case of Machino Montell (I) India Ltd. (supra), which is no longer a good law as same has been set aside by the Hon'ble Punjab and Haryana High Court's judgment reported in .