COMMISSIONER OF CENTRAL EXCISE Vs. VAIBHAVLAXMI SAH. PANI PURWATHA SANSTHA MARYADIT KANTHUSAGAR SAH. PANI PURWATHA SANSTHA MARYADIT B.A. DESAI

JUDGEMENT

(1.) THESE appeals filed by the Revenue are against the Appellate Commissioner's order vacating the penalties imposed by the original authority on the respondents. In a show -cause notice issued by the department to M/s Finolex Industries Ltd and the present respondents, a demand of duty was raised on the said company and penalties were proposed on all the noticees. In respect of the above company, penalty was proposed under Section 11AC of the Central Excise Act read with Rule 25 of Central Excise Rules, 2002. In respect of the other noticees (present respondents), penalties were sought to be imposed under Rule 26 of Central Excise Rules, 2000. The demand of duty on the above company was consequential to denial of exemption under -CE dated 8.1.2004 from payment of duty on the goods in question (PVC pipes). It was alleged in the show -cause notice that the conditions of the exemption notification had not been fulfilled by M/s Finolex Industries Ltd. One of the conditions attached to the notification was that a certificate from the Collector of the Revenue District where the pipes were intended to be used in the execution of water supply scheme should be obtained through the buyer of the goods. The PVC pipes in question were sold to the respondents, who obtained such certificates from the District Collector and furnished to the manufacturer of PVC pipes (M/s Finolex Industries Ltd), who, on the strength of such certificates, effected duty -free clearance of the pipes by availing the benefit of the above notification. The case made out in the show -cause notice against the respondents was that, by obtaining wrong certificates from the District Collector and supplying the same to the pipe manufacturer, they acted in aid of illegal availment of exemption from payment of duty on the pipes. Hence, the invocation of Rule 26 against the respondents. The adjudicating authority held the respondents to be liable for penalty on the grounds alleged in the show -cause notice. However, in the operative part of the order, the adjudicating authority mentioned Rule 25 instead of Rule 26. In the appeals filed by the parties against the penalties imposed by the adjudicating authority, learned Commissioner (Appeals) granted relief to the appellants after holding that no penalty was liable to be imposed on them under Rule 25. In the present appeals, the department submits that the lower appellate authority erred in having noted that the original authority had imposed penalties on the respondents under Rule 25. It is submitted that the mention of this rule in the operative part of the Orders -in -Original was only a typographical mistake. The learned SDR has reiterated the grounds of this mistake.

(2.) I have heard the counsel for the respondent in appeal E/353/07 also. There is no representation for the respondents in the other appeals despite notice, nor any request of theirs for adjournment. However, their written submissions are available on record, which I have perused.

(3.) AFTER giving careful consideration to the submissions, I find a point in these appeals of the revenue. The show -cause notice invoked Rule 25 against the manufacturer of pipes and Rule 26 against the buyers (present respondents). The adjudicating authority examined the conduct of the parties and discreetly held the respondents to be liable for penalty on grounds relatable to Rule 26. However, in the operative part of its order, that authority mentioned Rule 25 instead of Rule 26 in respect of the respondents. Obviously, the adjudicating authority could not correct the mistake for want of statutory power to do so. The first appellate authority ought to have applied its mind. This did not happen in this case. It proceeded on the wrong premise that the lower authority had penalized the parties under Rule 25. Obviously, the appellate authority did not care to read the tenor of the orders -in -original as regards penal liability of these respondents. The Orders -in -Original contained clear findings with regard to such liability of the respondents. Unfortunately, those findings were overlooked and it was held that no penalty was imposed on the respondents under Rule 26 by the adjudicating authority. Non -application of mind is writ large on the Appellate Commissioner's order insofar as the penal liability of these respondents is concerned. I have no option but to set aside that order.