ORDER
P.G. Chacko, Member (J)
1. Examined the records and heard both the sides.
2. The appellants are manufacturers of Exhaust Fans, for which they use Aluminium Ingots, C.R. Strips and Copper Wire as inputs. On 18-12-1998, officers of Central Excise visited their factory and found shortages of the said inputs. The appellants admitted that they had cleared the quantity of inputs found short, without payment of duty. They also debited forthwith an amount of Rs. 1,61,040/- in their RG-23A, Part-II register towards part-payment of the duty of excise on the said quantity. The balance amount of Rs. 57,996/- was debited on 28-12-1998. The department, however, issued a show cause notice on 9-8-1999 proposing, mainly, to impose penalties on the party under various provisions of law. The provisions mainly invoked, in this connection, were Rule 173Q of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944. The show cause notice was contested. The adjudicating authority imposed a penalty of Rs. 2,19,036/- on the party under Rule 173Q read with Section 11AC, apart from appropriating the aforesaid Modvat debits towards the demand of duty confirmed against them. The appeal preferred by the party against the decision of the original authority did not succeed before the Commissioner (Appeals).
3. Hence the present appeal.
4. Ld. Counsel for the appellants submits that the entire amount of duty was paid long before issuance of the show cause notice. Therefore, any penalty under Section 11AC or Rule 173Q was not justifiable. A major part of the duty was paid on 18-12-98 itself and the balance paid within a fortnight. These payments were made voluntarily and there was no intention to evade payment of the duty. In the circumstances, the penalty imposed on the appellants is liable to be set aside. Ld. Counsel relies on the following decisions :-
(i) Dynamatic Technologies Ltd. v. CCE, Chennai – 2003 (54) RLT 675 (T)
(ii) Arvind Chemi Synthetics (P) Ltd. v. CCE, Delhi-III – 2004 (163) E.L.T. 91 (T) = 2003 (58) RLT 518 (T)
(iii) EID Parry (India) Ltd. v. CCE, Jaipur – 2003 (157) E.L.T. 193 (T)
5. Ld. DR, on the other hand, relies on the Tribunal’s decision in Indian Oil Blending Ltd. v. CCE, Kolkata-I [2002 (53) RLT 224 (CEGAT-Kol.)] and submits that as the duty was paid by the party only after detection of the shortages by the department, the payments cannot be said to be voluntary and, therefore, the penalty is sustainable.
6. I have examined the submissions. It is not in dispute that the entire amount of duty was paid by the party long before the show cause notice was issued. The show-cause notice itself accepted the voluntary nature of the payment of duty inasmuch as it, inter alia, called upon the party to show cause why “the amount of Rs. 2,19,036/- voluntarily paid by them towards Central Excise duty during the course of investigation of this case should not be appropriated towards duty as mentioned above”. In all the cases cited by the Counsel, the duty was paid voluntarily by the respective assessees before the issuance of the show cause notices and it was held by the Tribunal that any penalty was not imposable under Section 11AC and/or Rule 173Q. In the case cited by the DR, it is not clear as to whether the payment of differential duty by the assessee was voluntary’ or not. The case law cited by the ld. Counsel is applicable to the instant case as voluntary character of payment of duty before issuance of show cause notice is a common thread of all these cases.
7. Following the case law cited by the Counsel, I set aside the penalty on the appellants. The appeal is allowed.