JUDGMENT
S.L. Peeran, Member (J)
1. The short issue that arises for consideration in this appeal with regard to imposition of equal amount of penalty of Rs. 2,22,745 under Section 11 AC of the CE Act.
2. The Departmental officers seized 8 bags of cotton yarn on cones weighing 400 kgs. valued at Rs. 43,384 on interception of a jeep in which these goods were carried. As a follow-up action the department checked the documents and verified the stock in the appellant’s factory. It was found that the appellant had not made any debit entry in the registers of PLA, RG 23 and their contention is that because of oversight and there was no intention to evade payment of duty. The original authority noted that this non-debit of duty on the goods has not happened for the first time but was going on over a period which they had cleared 242 bags of yarn without debiting duty due by them. The appellant’s contention regarding this portion of the offence is that documents had been prepared including challans and there was nothing to show that these quantum of goods were removed without payment of duty. It was due to clerical lapse that the entries had not been made but all other statutory documents had been made and prepared. However, this explanation was not accepted and hence the amount has been appropriated in the PLA which was later entered and equal amount of penalty has been imposed under Section 11AC. The prayed of the appellant that penalty cannot be imposed and if penalty is imposed it has only commensurate to the value of 8 bags of cotton yarn seized in the jeep is required to be taken for consideration. This plea was not accepted by both the authorities and hence this appeal.
3. Ld. Consultant Shri Kandasamy submits that there was no removal of 242 bags without payment of duty but debit entries had not been done in the PLA while all the documents had been prepared before removal of the goods. He produces other documents and submits that there was no intention to evade payment of duty and there was sufficient balance in the PLA. He submits that mandatory penalty cannot be imposed on this amount and only it is to be restricted to the value of 8 bags on the total duty liability which is Rs. 7,982. He refers to the Apex Court judgment rendered in the case of State of Madhya Pradesh v. BHEL, 1998 (99) ELT 33 (SC) wherein it has been held that adjudicating authority need not impose mandatory penalty equal to the quantum of the duty. He submits that the duty liability escaped payment was only to the extent of Rs. 7,982 on the quantum of 8 bags which was valued at Rs. 43,384. He submits that the mandatory penalty under Section 11AC is required to be scaled down on the basis of duty liability only on 8 bags seized from the jeep.
4. SDR opposes the prayer and contends that the total duty involvement was Rs. 2,22,745 which had not been debited in the PLA. The said entries were made only after the officers detected the offence. He submits that imposition of penalty under Section 11AC to the extent of Rs. 2,22,745 is justified.
5. I have carefully considered ihe submissions and perused the records. The value of the goods seized from the jeep on clandestine removal is Rs. 43,384 and the quantum of duty is Rs. 7,982. Ld. Consultant submits that the mandatory penalty under Section 11AC has to be confined on this amount and as 242 bags had not been removed from the factory. Even on that goods the documents had been made but only the debit entry had not been done which is only a procedural lapse. For procedural lapse pertaining to non-entries in the register there is a specific provision for imposing penalty and that is Section 226 of CE Rules. The said rule was not invoked for imposing penalty for non-debiting the amount in PLA with regard to 242 bags of which the documentation had been completed. Therefore the authorities have committed an error in imposing penalty on the value of goods involving on 242 bags for which documentation have been done and the PLA entries were also done subsequently. In the case of Amritsar Crown Caps (P) Ltd. v. CCE, 2002 (140) ELT 437 wherein it has been held that duty paid before issue of show cause notice penalty cannot be imposed under Section 11AC. Further I notice that in terms of Section 11AC penalty is imposable for short levy or non-levy of duty in certain cases. For imposing penalty under the Section there should have been evasion of duty and the liability to pay duty should be determined. In the present case with regard 242 bags no such offence have been committed. In this case documents had been prepared and statutory documents had been made ready except for debiting the entry in PLA were there was sufficient balance, therefore for such offence only Rule 226 should have been invoked. Imposition of penalty on this quantum of goods is not justified and not legal in the light of the judgment referred to before me. Hence the order is modified. However the quantum of mandatory penalty and the quantum liable to be paid on the seized 8 bags in sustained. The duty involved is Rs. 7,982. The Apex Court has held in the case of State of Madhya Pradesh v. BHEL (supra) that mandatory penalty need not be equal to the extent of duty liability. Therefore taking into consideration the Apex Court judgment mandatory penalty under Section 11AC is reduced to Rs. 5,000 only. The order is modified accordingly and the appeal is disposed of in this term.