SRM SPINNERS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants were engaged in the manufacture of Cotton Yarn during the material period. After a visit to their factory and investigations, officers of Central Excise found that, during the period 1 -4 -1997 to 28 -8 -1997, the appellants' reeling machine was in disuse and hence cotton yarn in hank could not have been manufactured and cleared during the said period. It appeared to the Department that, during the above period, the appellants were manufacturing and clearing cotton yarn on cones, which was dutiable unlike hank yarn. It was found that no duty was paid by the party during the said period, which was quantified at Rs. 1,60,8147 - and demanded by way of a show cause notice dated 26 -2 -1998. The notice also proposed a penalty on the party under Section 11AC of the Central Excise Act.

(2.) AN amount of Rs. 50,000/ - had been paid towards duty on cone yarn cleared during the above period, prior to issuance of the show cause notice. The balance amount was not paid and the party contested the entire demand at the original and first appellate stages. The original authority confirmed the demand and appropriated the payment of Rs. 50,000/ - towards the demand so confirmed. It also imposed a penalty of Rs. 1,60,814/ - on the assessee. This order was upheld by the first appellate authority. Hence the present appeal.

(3.) AFTER examining the records and hearing both sides, I find that there is no sustainable challenge against the demand of duty. The stress, in the Memo of Appeal, is on penalty. Ld. Counsel for the appellants has argued that, in view of payment of nearly one -third of the amount of duty prior to issuance of the show cause notice, the lower authorities ought not to have imposed the maximum penalty on the assessee under Section 11 AC. According to id. Counsel, the authorities should have exercised their discretion under Section 11 AC, having regard to the relevant rulings of the Apex Court. Ld. SDR has reiterated the findings recorded by the lower authorities.