ORDER
G.R. Sharma, Member (T)
1. Arguing the case for the three appellants Shri G. Shiv Das, ld. Counsel submits that the appellant is a 100% Export Oriented Unit manufacturing Polyester/Synthetic Yarn, Cotton Yarn and Blended Yarn; that the appellant maintains a running bond account which at the time of clearance of goods meant for export, is debited with an amount equivalent to the Central Excise Duty payable on the goods cleared; that the appellants in the month of June, 1996 cleared five consignments for export after debiting the requisite amount in the running bond account; that the samples of the goods sent to foreign purchasers were not approved and therefore, the goods cleared were diverted to the Domestic Tariff Area. He submitted that the Officers of Central Excise Department visited their warehouse and seized the yarn; that the departmental authorities conducted detailed investigations; that the appellants calculated the amount of duty and paid the same; that a SCN was issued on 3-1-1997 to confirm the amount of duty and proposing penal action under Rule 14A and Rule 173Q of Central Excise Rules.
2. He submitted that under the SCN, penalty was proposed to be imposed under Rule 173Q; that Rule 173Q was not applicable in their case as the appellants were governed by provisions of Chapter VA of the Central Excise Rules, 1944; that the Ld. Commissioner proceeded to impose penalty under Rule 209 of the Central Excise Rules; that this rule was not invoked in the SCN; that the Commissioner himself holds that the appellants are liable to penal action under Rule 14A of the Central Excise Rules, 1944; that the imposition of penalty under Rule 209 is incorrect.
3. Ld. Counsel submits that under Rule 14A of the Central Excise Rules, 1944, the maximum penalty that can be imposed is only Rs. 2,000/-.
He submits that even under Rule 209, the appellants are not liable for penal action under sub-clauses (a) & (d).
4. Ld. Counsel submits that as regards the imposition of penalty under Rule 209A, such a penalty is imposable only if the goods are liable for confiscation; that in the SCN, there was no proposal for confiscation of the goods; that confiscation of the goods by the Commissioner is incorrect since there was no proposal to confiscate the goods in the SCN while invoking Rule 209A.
5. Ld. Counsel submits that the goods are not liable to confiscation even under the provisions of Rule 209; that Rule 14A also does not provide for confiscation of goods, therefore, imposition of penalty under Rule 209 on the individuals is not correct. In support of his above legal contentions, Ld. Counsel refers to various Rules relevant for the purpose. Ld. Counsel submits that in view of the above submissions, the three appeals may be allowed.
6. Shri R.D. Negi, ld. DR submits that the appellants cleared goods for export but diverted them to Domestic Tariff Area. He submits that no information about this diversion was furnished to the Department and that the Department came to know only when they visited the warehouse of the appellants. He submits that since the goods were diverted, therefore, the authorities below have rightly demanded the duty and imposed the penalties. He reiterates the findings of the authorities below.
7. We have heard the rival submissions. We have also perused the evidence on record and the various rules referred to by the appellant. We note that only Rule 14A of the Central Excise Rules is applicable to the facts of the present case. Other Rules cited and relied upon by the authorities below are not applicable. Under Rule 14A, a penalty of Rs. 2,000/- can be imposed. Since there were five consignments, the total amount of penalty im-posable in the present case will be Rs. 10,000 (Ten Thousand).
8. We have perused the various case laws cited and relied upon by the Counsel for the appellants. We find that there is no contravention of the rules by the other two appellants, therefore, imposition of penalty on the other two appellants is not sustainable in law. The same is set aside. The three appeals are disposed of in the above terms.