2005 (98) ECC 457 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri Jeet Ram Kait, Member (T)

Gokulam Spinners

Versus

Commissioner of Central Excise, Coimbatore

Appeal No. E/768/2003/MAS

[Arising out of Order-in-Appeal No. 266/2003-CE dated 5.9.2003 passed by the Commissioner of Central Excise (Appeals), Coimbatore]

Final Order No. 835/2004, dt. 30.9.2004, Certified on 6.10.2004

Penalty (C. Excise)

Show Cause Notice -- No penalty can be imposed when the duty has been paid before the issuance of Show Cause Notice -- SCN was issued on 14.3.1997 whereas duty was paid on 8.10.1996 -- Impugned order imposing penalty, set aside -- Central Excise Act, 1944, Section 11 -- Central Excise Rules, 1944, Rules 9(2), 52A and 173Q.

[Paras 2, 3]

PRESENT :

Shri M. Saravanan, Const. for the appellant.

Shri B.L. Meena, SDR for the respondent.

Cases Cited :

1. CCE, Delhi-II v. Machino Montell (I) Ltd., 2004 (96) ECC 180 (LB)...................... [Para 2]

2. CCE, Mangalore v. Shree Krishna Pipe Industries, 2004 (165) ELT 508 (Kar)...... [Para 2]

3. EID Parry (India) Ltd. v. CCE, Jaipur, 2003 (157) ELT 193 (Tri-Chennai)............. [Para 2]

4. Kopper Eletro Systems v. CCE, Cochin, 2004 TIOL 536 CESTAT-Bang............. [Para 2]

5. Rastriya Ispat Nigam Limited v. CCE, Visakapattinam, 2003 (161) ELT 285 (T)... [Para 2]

Per : Jeet Ram Kait

This appeal is against the Order-in-Appeal No. 266/2003-CE, dated 5.9.2003 by which Ld. Commissioner (Appeals) has sustained the penalty imposed under Section 11AC of the Central Excise Act, 1944 and under Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 imposed by the lower authority but reduced the same from Rs. 1,42,188 to Rs. 40,000.

2. Appearing on behalf of the appellants Ld. Consultant Shri M. Saravanan has submitted a written submission and has cited the judgment of the Hon'ble Supreme Court, which dismissed the department appeal filed against the decision of the CEGAT, SZB, Bangalore in the case of Rastriya Ispat Nigam Limited v. CCE, Visakapattinam, 2003 (161) ELT 285, and has held that penalty is not imposable under Section 11AC of the Central Excise Act, 1944 as well as under Rule 173Q of the Central Excise Rules, 1944 when the amount of duty is paid before the issue of the Show Cause Notice. He, therefore, submitted that this issue attained finality in view of the judgment of the Hon'ble Supreme Court reported in 2004 (163) ELT A. 53. Ld. Consultant has also relied on the Larger Bench decision of the Tribunal in the case of CCE, Delhi-II v. Machino Montell (I) Ltd., 2004 (96) ECC 180 (LB) : 2004 (168) ELT 466 (CESTAT-LB) wherein it was held that penalty cannot be imposed if the amount of duty is paid before the issuance of Show-Cause Notice. Ld. Consultant also relied on the judgment of the Karnataka High Court in the case of CCE, Mangalore v. Shree Krishna Pipe Industries, 2004 (165) ELT 508 (Kar) wherein also a similar view was taken and the reference application filed by the Revenue was rejected. He also relied on the decision of this Bench in the matter of EID Parry (India) Ltd. v. CCE, Jaipur, 2003 (157) ELT 193 (Tri-Chennai) wherein this Bench has held that penalty is not imposable when the duty was paid before the issuance of the Show-cause Notice. He further submitted that the combined penalty under Section 11AC of the Act ibid and Rules 9(2), 52A, 226 and 173Q of the Rules ibid is not imposable. In this connection be relied on the decision of the Bangalore Bench in the case of Kopper Eletro Systems v. CCE, Cochin, 2004 TIOL 536 CESTAT-Bang wherein the Tribunal has held that combined penalty under Section 11AC and Under Rule 173Q is not legally sustainable. He therefore prays that the penalty of Rs. 40,000 imposed may be set aside. Also heard Ld. SDR Sri B.L. Meena who has perused the judgments.

3. I have examined the records and considered the rival submissions. I find that the issue is no longer res integra and it is now well settled that no penalty under Section 11AC of the Act ibid or under various Rules of the Central Excise Rules can be imposed when the duty has been paid before the issuance of Show-cause Notice. In the instant case Show-cause Notice was issued on 14th March, 1997, whereas the duty of Rs. 1,42,088 was paid on 8th October, 1996. Respectfully following the above judgments cited by Ld. Consultant. I set aside the impugned order imposing the penalty of Rs. 40,000 under Section 11AC and under Rules 9(2), 52A, 173Q and 226 of the Central Excise Rules, 1944 and allow the appeal. Ordered accordingly.

………………………