Commr. of C. EX., Chennai-I vs Drums and Barrels Madras Pvt. Ltd.

Prabha Sridevan, J.—The following question of law was raised in the above appeal but not framed at the time of admission and accordingly,

the following question of law is framed for consideration :-

Whether the Tribunal is right in reducing the penalty from Rs. 1,64,687/-to Rs. 16,000/- when there is a provision under Rule 57-I(4) of the Rules

and Section 11AC of Central Excise Act, 1944 to impose a penalty equal to the amount evaded/disallowed and also when the 1st respondent

evaded duty by willfully suppressing the facts and the evasion was unearthed by the Revenue in surprise checks?

We have heard Mr. Arun Kumar, Senior Central Government Standing Counsel for the Department. The first Respondent though served had

not entered appearance through counsel.

The issue raised in the appeal is directly and substantially covered by the recent decision of the Hon''ble Apex Court in Union of India (UOI)

and Others Vs. Dharamendra Textile Processors and Others,

In the instant case, the Tribunal after having found that the respondent company has accepted the removal of inputs, without expunging the

credit, proceeded to reduce the monetary penalty imposable under Rule 173Q of Central Excise Rules, 1944. The Hon''ble Apex Court in the

decision cited supra held that it is a well settled principle in law that the Court cannot read anything into a statutory provision or a stipulated

condition which is plain and unambiguous and the language employed in a statute is the determinative factor of legislative intent. The Rule provides

for mandatory penalty equivalent to amount of duty which cannot be interfered with and the Apex Court has further held that there is no discretion

vested with the authority. The order-in-original confirms.

(i) the demand of Rs. 1,64,687/- under Rule 57-I of Central Excise Rules, 1944, the demand of Rs. 1,91,681/- against the clearances Modvat

credit availed capital goods i.e. Mobile crane, to their de-coiling plant situated outside their manufacturing premises under Rule 57U of Central

Excise Rules, 1944;

(iii) impose a total penalty of Rs. 2,86,368/- as equal to the sum total of the above confirmed demands under Rule 57-I & 57U of Central Excise

Rules, 1944;

(iv) impose a penalty of Rs. 25,000/- under Rule 173Q of the Central Excise Rules, 1994 on M/s. Drums & Barrels (Madras) Pvt. Limited and

(v) direct the assessees to pay interest at appropriate rates as provided in the Modvat Rules.

While 173Q providers for discretion with the authority with regard to the quantum of penalty. In the same case, the Supreme Court observed in

Paragraph 7 that, where the outer limit of penalty is fixed, which indicates the scope of discretion, Rules 57-I provides for imposition of a penalty

equal to the credit so dissolved and therefore, as regards the imposition of penalty under Rule 57-I in a sum of Rs. 1,64,687/- could not have been

reduced. Whereas, since the discretion is vested with the authority to reduce the penalty u/s 173Q, that is not interfered with. The civil

miscellaneous appeal is allowed to the extent indicated above.