ORDER
K.D. Mankar, Member (T)
1. The appeal is directed against the order of the Commissioner (Appeals), whereunder the appeal of the appellants against the order imposing penalty was rejected.
2. Briefly stated the appellants were held liable to pay duty of Rs. 68,216/- in respect of 15.15 MTs of S.S ingots, which were found short in the physical stocks when compared to the balance recorded in books of accounts. The appellants paid the duty on 18-12-98 – 23-12-98. The show cause notice issued on 4-1-99 sought confirmation of the said duty under Section 11A and also proposed imposition of penalty. In adjudication, the duty already paid was confirmed. In addition penalty of Rs. 50,000/- was imposed under Rule 173Q, though the show cause notice proposed penalty under Section 11AC as well.
3. Heard both sides. It is pleaded by the appellants that since the suppression and evasion has been involved the show cause notice ought to have been issued by the Deputy Commissioner and not the Superintendent. So far as this ground is concerned, it is to be noted that this is not a case of short-levy, non-levy, etc., but a case of clandestine removal. The term short-levy, etc., presuppose an initial assessment, which is being reopened to demand the duty, that escaped assessment. Since the goods have been clandestinely removed, the show cause notice issued by the Superintendent cannot become the one as being without the authority of law. Hence, I reject this plea.
4. Another challenge is that since the penalty was proposed under Section 11AC as well as Rule 173Q penalty under Section 11AC could have been ordered and not under Section 11AC. This ground is also without basis. Section 11AC deals with short-levy, non-levy, etc., while the case here relates to clandestine removal.
5. It was also pleaded that since the duty has been paid before the issue of show cause notice, penalty cannot be imposed. However, the reading of the Rule 173Q does not lead to this proposition. On the contrary as pointed out by the ld. DR no mens rea is needed to impose the penalty as held by the Hon’ble Bombay High Court in the case of Kirloskar Brothers Ltd. v. UOI, as reported in 1988 (34) E.L.T. 30 (Bom.).
6. Considering the above discussion, I held that the penalty was correctly imposed on the appellants. However, taking into account the fact that duty evaded is Rs. 68,216/- the amount of penalty of Rs. 50,000/- is excessive. I, therefore, reduce the penalty from Rs. 50,000/- to Rs. 20,000/- (Twenty thousand only). Except for this modification the rest of the impugned order is confirmed.
7. Accordingly, the appeal is partly allowed.