Whether penalty can be levied where the goods is cleared to the market without having re-warehousing certificate by the 100% EOU? 2. Whether the option to pay 25% penalty within 30 days from the receipt of the order is available where the same is

PJ/Case Laws/2011-12/1121

Prepared By:
CA. Rajani Thanvi &
Bharat Rathore

Case: Commissioner of Central Excise, Daman v/s Speciality Ploymers

Citation: 2011 (265) ELT 412 (Tri-Ahmd)

Issue:-
1. Whether penalty can be levied where the goods is cleared to the market without having re-warehousing certificate by the 100% EOU?
2. Whether the option to pay 25% penalty within 30 days from the receipt of the order is available where the same is not given in the order.

Brief Facts:- Respondent is a 100% EOU and is a partnership firm. It cleared the stock to another 100% EOU without payment of duty. They did not receive re-warehousing certificate and the goods were diverted to the Market. Demand of duty was raised and penalties were proposed to be imposed on the respondent-partnership firm as well as the individual partners.

The Adjudicating Authority confirmed the demand of duty and imposed penalties under the provisions of Central Excise Rules and Customs Act. Respondent filed appeal against the impugned order.

The Commissioner (Appeal) upheld the order demanding duty but set aside the penalty imposed on the partnership firm. The order imposing penalties on the Partners was upheld. It was held that penalties cannot be imposed on the partnership firm as also on the partners.

Against this order, Revenue is in appeal before the Tribunal.

Appellant’s Contentions:- Revenue contended that though the order of the Commissioner (Appeal) holding that separate penalties should not be imposed on the partnership firm as on the partners was correct in the light of the judgment given by Bombay High Court in M/s Jupiter Exports [2007 (213) ELT 641 (Bom)], the Commissioner (Appeal) should have set aside the penalties on the partners and not on the partnership firm.

Reasoning of Judgment:- The Tribunal agreed with the contention of the Revenue. From the facts, the Tribunal observed that it was the firm that had committed the contravention and was liable to penalty. Accordingly, the impugned order is modified and imposition of penalty on the partnership firm is upheld.

It was further held that as the partnership firm was not given the option to pay 25% of the penalty amount within a period of 30 days from the date of receipt of the order in which case, penalty shall stand reduced to 25%. Reliance was placed on judgment given in Swati Chemicals & Others [2009 (94) RLT 684 (CESTAT)] andin M/s Exotic Associates v/s CCE [2010 (252) ELT 49 (Guj)]. It was held that as such while upholding the penalty upon the partnership firm as ordered by Original Adjudicating Authority, the Tribunal extended option to the respondent to pay duty and interest and 25% of the penalty within 30 days from the date of receipt of this order, in which case, the penalty shall stand reduced to 25%.

The Tribunal not interfering with the part of the order of Commissioner (Appeals) regarding penalties on the partners for which no separate appeals filed by the partners of the respondent-firm.

Decision:- Appeal disposed off accordingly.

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PJ/Case Laws/2011-12/1121

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