RAJAPALAYAM CEMENT AND CHEMICALS LTD. Vs. CCE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I am of the view that the appeal itself has to be finally disposed of. Accordingly, after dispensing with predeposit, I take up the appeal.

(2.) AFTER certain investigations, the Department found that the appellants had made credit entries in their PLA and adjusted the same towards payment of duty of an amount of Rs. 3,56,636/ - on goods cleared by them during the second fortnight of Feb. 2003, without the required amount in their bank account. Accordingly, the Department issued a show -cause notice to them demanding the above amount under Section 11A of the Central Excise Act. with interest thereon under Section 11AB of the Act and proposing penalty on them under Section 11AC of the Act. By the time this notice was issued, the party had already deposited the above amount with the Department. In adjudication of the show -cause notice, the original authority appropriated the above deposit towards the demand and imposed on the party a penalty of Rs. 3,56,636/ - under Section 11AC and another penalty of Rs. 1.5 lakhs on them under Rule 25 of the Central Excise Rules, 2002. The first appellate authority set aside the penalty under Rule 25 ibid and sustained the rest of the order passed by the original authority. In the present appeal against the order of the Commissioner (Appeals), the challenge is against the penalty imposed under Section 11AC of the Central Excise Act.

(3.) IN the case of Jkon Engineering (P) Ltd, the party had manufactured excisable goods without Central Excise registration and cleared the goods without payment of duty or observing other Central Excise formalities. But they paid duty on the clearance, before issuance of show -cause notice by the Department. The show -cause notice, subsequently issued, sought to impose a penalty on the party under Section 11AC of the Central Excise Act. The Tribunal held that such penalty was not imposable. The Department framed the following question of law and applied to the High Court for a decision thereon: