ORDER
R. Jayaraman, Member (T)
1. This is an appeal directed against the Order-in-Appeal No. 28/Collector/91 dated 8-12-1991 passed by the Collector of Central Excise & Customs, Ahmedabad imposing a penalty of Rs. 2.00 lacs on the appellants.
2. The facts of the case are that on receipt of certain information, the officers of Central Excise carried out a check in the appellants’ factory producing TV sets. Information was to the effect that the appellants had been evading duty in respect of TV sets duly manufactured and cleared by them under the guise of old TV sets received for repairs in terms of Rule 173H. Investigations were conducted and it came to light that the appellants had even removed the number plates showing the chassis number and other particulars, date of manufacture for purpose of being within the four corners of Rule 173H. They had received old TV sets from their electronic division and original numbers were changed so as to get advantage of their repair within the warranty period. With all these evidences the Collector has come to the conclusion that there is no evasion of duty and dropped the demand for a sum of Rs. 16.95 lacs holding that there are adequate evidences to show that equal number of sets have been received under Rule 173H which were subsequently cleared without payment of duty and hence, no duty demand could be sustainable. However, he imposed a penalty of Rs. 2.00 lacs under Rule 173Q for contravention of Rule 173H as discussed above. The present appeal is against the aforesaid order.
3. Both at the time of hearing of stay application as well as during the hearing of appeal today we checked up from the Departmental Representative as to whether any appeal has been filed by the Department against the order dropping the demand, the Ld. JDR stated that they have received a letter from the Collector and even in this letter no reference to any appeal filed by the department is mentioned and hence, according to his knowledge and information no appeal has been filed. No cross objection has also been filed by the Department. Hence the order of the Collector holding that the duty evasion is not there and the dropping of demand for Rs. 16.95 lacs remains unchallenged before us and it has become final. In the context of the aforesaid position, we looked into the limited issue of imposition of penalty in terms of Rule 173Q of the Rules. Rule 173Q could be invoked where a manufacturer “contravenes any of the provisions of the rules with an intent to evade payment of duty”.
4. After hearing both the sides, we find that when the admitted position is that there is no duty evasion in this case and the duty demand has been dropped by the Collector, Rule 173Q would not be available for imposition of penalty. If there had been a contravention of Rule 173H, they could not have cleared the goods without payment of duty. But, here, we find a peculiar situation when the Collector holds that duty demand is not justifiable and there is no duty evasion. Since this finding cannot be disturbed by us suo moto on our own, without any appeal from the Revenue or a cross objection, going by the unchallenged findings of the Collector, he is not justified in invoking Rule 173Q to impose a penalty. Because that rule can be pressed into action, only when there is a violation of rules with an intend to evade duty. Hence we are to set aside the penalty.