Decided on October 12,2000



S.S.SEKHON,MEMBER (T) - (1.)THIS appeal has been filed by a manufacturer of pressure cookers who for the purposes of procuring the raw material and parts was, inter alia, procuring metallic safety plugs used in the pressure cooker and also supplying part of such plugs procured by them on payment from M/s. P.S. Industries to various customer stations as replacement. A show cause notice was issued to M/s. P.S. Industries that these metallic safety plug being manufactured by them and supplied to the present appellants were required to pay Central Excise duty. This show cause notice was also addressed to the present appellants alleging that they have procured and acquired the possession of said goods and consumed themselves by such acquisition or possession of non duty paid branded excisable goods and therefore they were liable for penalty under Rule 209A which the Additional Commissioner observed and he imposed a penalty of Rs. 5000/ - on them.
Appeal by P.S. Industries who were asked to pay duty of Rs. 44,226/ - and who were imposed a penalty of Rs. 5000/ - under Rule 173Q(1) was decided by this Bench vide its order No. 993/96 by which the Bench, remanded the matter to the lower authorities to examine the issue of the correct valuation for the purposes of duty in the light of Ujagar Prints case reported in, 1988 (38) ELT 535 (SC) :, 1988 (19) ECR 578 (SC) :, ECR C 1281 SC and reduced the penalty in the facts and circumstances of the case to Rs. 2000/ - only.

(2.)WE have heard Shri N. Radhakrishnan, Dy. General Manager (Indirect Taxation) for the appellants and Shri Section Kannan, Ld. D.R. for the department and after considering their submissions we find
(a) The period involved for receipt of the impugned goods is April 1988 to September 1988 and during this period, we find that Section 12A was not on the statute book. It was introduced only on 20.9.1991 vide Notification No. 30/91. This section provides that price of goods should indicate the amount of duty paid thereon and receipt of goods from a local manufacturer, after this date may bring in mens rea on the part of the receiver of the goods to invoke charge of acquiring possession of "non -duty paid goods". Prior to this date, there was no means by which the appellants could have come to know that the goods are not duty paid. Since during that period the invoices were not required to indicate the particulars of a duty paid, Appellants in the present case were not availing modvat, their end product being fully exempted from Central Excise duty. Therefore, the benefit of doubt, to our mind, goes to the present appellants. Penalty can be imposed for a conscious disregard of the law and not for a simple technical breach thereof.

(b) We have also examined the order of this Bench in the case of manufacturer of the excisable goods in this case and keeping in mind the findings therein that for an innocent breach of law due to misunderstanding and misinterpretation of the notification, penalty on the manufacturer has been reduced from Rs. 5000 to Rs. 2000/ -, we would therefore consider that present appellants who is only the recipient of the subject goods should not be liable for invocation of any penalty on them.

(c) We also find that total duty determined by the lower authorities is Rs. 44,226/ - may get reduced by the application of the formula prescribed for valuation of such goods. Therefore, penalty cannot be determined, till such time, the duty liability is determined which will be, to our mind, substantially lower. Therefore, we find no case or cause for imposition of penalty on the present appellants.

(3.)IN view of our findings, we would allow this appeal after setting aside the order of penalty. Ordered accordingly with consequential relief.
(Pronounced & dictated in open Court).

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