ORDER
M.V. Ravindran, Member (J)
1. is appeal is directed against Order-in-Appeal dated 17.6.2002 which upheld the order-in-original imposing penalty and confiscating the packing material found excess in the appellant’s factory.
2. The issue involved in this case is regarding imposition of penalty under Section 11AC of the Central Excise Act on the goods which were cleared by the appellant clandestinely without payment of duty and noticed during the surprise visit of the officers. The appellants discharged the duty liability on 1.10.2002 while the show cause notice was issued on 26.3.2003 and redemption fine (sic) imposed on the appellant on the packing material which were found in excess than the recorded balance in the appellant’s factory. The appellant was not able to produce duty paying documents in respect of such packing material.
3. Considered the submissions made by both sides and perused the record. It is the contention of the learned Consultant for the appellant that since the duty liability stands discharged before the issuance of show cause notice there cannot be any penalty on the appellant under Section 11AC of the Central Excise Act, 1944. 1 find force in the appellant’s submission as regard penalty. The Hon’ble High Court of Bombay in the case of CCE v. Gaurav Mercantile as reported at on an appeal by the Revenue held as under:
3. The substantial questions of law sought to be raised are as under:
(i) Whether the Tribunal is correct in interpreting Section 11A of Central Excise Act while holding that Duty demand on 19/4/2004, was not required to be made due to insertion of Section 2B to Section 11A on 11/05/2001 and that invoking the penalty clause of Section 11C is not called for?
(ii) Whether Sub-clause (2B) of Section 11A is applicable considering the fact that the assessee indulged in clandestine removal. When the show cause notice contains detailed narration of events apparently leading to the conclusion of intention to evade payment of duty, whether mere non-invocation of specific section/provision to Section 11A will vitiate the show cause notice for purpose of imposition of penalty under Section 11AC of Central Excise Act, 1944?
4. Factual matrix reveals that the show cause notice was issued on 19/04/2002 whereas entire amount of duty and penalty was paid on 31/01/2001 and 01/09/2001
It is thus clear that the entire duty liability was paid prior to the issuance of show cause notice.
5. Learned Counsel appearing for the respondent-assessee tried to support the order of the Tribunal on the basis of two judgments; one of the Madras High Court in the case of CCE, Madras v. Jkon Engineering (P) Ltd. 2005 (67) RLT 157 (Mad.) and another from the Karnataka High Court in the case of Commissioner of C. Ex. Mangalore v. Shree Krishna Pipe Industries , wherein both the Courts have taken a view that where duty or penalty imposed has been deposited before issuance of show cause notice under Section 11AC of the Central Excise Act, 1944, no action under Section 11AC of the Central Excise Act should be initiated or taken.
6. It is also brought to our notice that a view similar to above view had also been taken by the Tribunal at Bangalore in the case of Rashtriya Ispat Nigam Ltd. v. Commissioner of Central Excise, Vishakhapatnam . The above view taken by the Tribunal at Bangalore was a subject matter of appeal before the Apex Court. Appeal has been dismissed by the Apex Court see 2004 (163) E.L.T. A53.
In this view of the matter, it can safely be concluded that the view taken by the Tribunal was accepted by the Apex Court.
7. In the above circumstances, no substantial question of law is involved in this appeal. Appeal is thus dismissed for want of substantial question of law.
Since the issue before me is covered by the order of the Hon’ble High Court, respectfully following the same I set aside the penalty imposed on the appellant under Section 11AC on the appellant.
4. As regards the redemption fine imposed on the appellant it is found from the record that the appellant did not produce any duty paying documents in respect of packing material. It is also an admitted position that these packing materials were cleared by the original manufacturer without payment of duty.
Since the goods cannot be identified as (sic) duty paid they are liable for confiscation. I upheld the confiscation of the said packing material. Since I am holding the confiscation as correct in law, redemption fine imposed by the lower authority also seems to be correct in the facts and circumstances of the case.
5. Accordingly, order-in-appeal is upheld as regard redemption fine is concerned and set aside as regard penalty is concerned. Appeal is partly allowed.
(Dictated & pronounced in the Open Court.)