ORDER
S.S. Sekhon, Member (T)
1. Commissioner Central Excise Pune-I has filed this appeal against Order-in-Original No. 47/CEX/98, dated 31-12-1998 passed by the Commissioner of Central Excise, Pune-I, which was reviewed by the Board vide order dated 10-12-1999 and the appeal came to be filed only on 22-5-2002 with condonation of delay application. The application for condonation of delay was dismissed by order dated 30-10-2002. Commissioner moved the Bombay High Court in W.P. No. 5689/03 & the Hon’ble Court vide order dated 24-9-2004 set aside the order dated 30-10-2002 of this Tribunal and ordered –
“We heard the learned senior counsel for the revenue and the learned counsel for the respondents.
Rule. Returnable forthwith. The writ petition is located on Board for final hearing.
By consent, the impugned order dated 2-11-2002 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, Mumbai, is set aside. The delay in making application by the revenue under Section 35A(4) stands condoned. The Tribunal shall now hear the said application made by the revenue under Section 35A(4) on its own merits.
Liberty to the parties to apply to the Tribunal for hearing the said application along with the appeals preferred by the respondents for the subsequent period.
Rule is disposed of in terms a foresaid. No costs”
2. This matter was listed for hearing on 5-5-2005 & adjourned & was heard on 17-6-2005 along with E/S/255/05 & E/279/05 as per bench orders on 5-5-2005. After hearing both sides it is found –
(a) Appeal E/1739/02 is against order of Commissioner dated 31-12-1998 on the valuation of goods cleared from an EOU for DTA sales & that order was challenged by the assessee and this Tribunal vide its Order No. C-I/873/74/2000/WZB, dated 2-3-2000 had remanded the matter to the Commissioner.
(b) On 2-3-2000, no appeal by Revenue was filed, the order of the Board Under section 35E directing the Commissioner to file the appeal was received only on 13-2-2000 by the Commissioner & the appeal prepared was dispatched only on 19-4-2000. Therefore following the Larger Bench decision in the case of LML – 2002 (143) E.L.T. 431 (Tri. – LB) this appeal even after the condonation of delay cannot survive & is required to be dismissed.
(c) The plea on merits on Section 11 AC penalty for the demand period in this case 19-12-1993 to 31-3-1998 cannot be upheld for first period since it is well settled that this penalty provision cannot be retrospective from the date it was issued i.e. 26-9-1996 & mandatory penalty need not be called for since Commissioner has found in para 15 of the order –
“15… I find that there is a short levy which occurred due to partly suppression of relevant facts and partly in ignorance of the correct Rules to be made applicable in this regard in view of the fact that such clearances are being assessed for the first time in the case of the assessee and there was an element of ignorance and lack of proper guidance by the departmental officers it is not proposed to penalize the assessee”….
Therefore it can be held that the conduct of the assessee, the officers and the first attempt at interpretation were the reasons arrived at for not imposing penalty on the assessee. We find these reasons to be exhibiting a ‘bona fide’ no penalty to be valid. Penalty cannot be arrived at or called under such circumstances. Penalty under Central Excise is not vindictive or retributive punishment. It is only a deterrent. When the step is for the first time without proper understanding & guidance it cannot be construed that it shall need deterrence for a possible repeat for future when guidance & understanding are available. Penalty has been justifiably not levied in our opinion.
(d) As regards the plea on valuation made in the appeal since the issue on valuation determination has been remitted back vide order dated 2-3-2000 of this Tribunal, we arrive at no findings, on this plea.
(e) As regards appeals E/279/05 & E/S/255/05 the issue covered is same vide 13 Show Cause Notices issued during the period this matter was pending in the Tribunal in the earlier proceeding remanded on 2-3-2000 on question of valuation of similar removal & confirmation of provisional assessments, resulted in disposal of the assessee appeal vide Order CB/526/WZB/04, dated 18-3-2004 in Appeal No. E/2166/03. As regards the 13 notices the Commissioner vide impugned Order Nos. 32 to 44/ASR (2004-ADJ), dated 29-10-2004 confirmed the duty demands Under Section 14 read with rule 7 of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 & imposed a penalty under Rule 209(1) read with Rule 173Q(1) of the Central Excise Rule, 1944 or under Rule 25(1) of the Central Excise Rules, 2001/2002 as the case may be. Hence this appeal & stay.
(f) After hearing both sides waiver of pre-deposit, we proceed to decide this appeal also as we find –
(i) Imposition of penalty under Rule 173Q is totally illegal since Chapter VIIA provision do not apply to EOU under the Central Excise Rules, 1944 due to Rule 173A(2). Proviso to Rule 11A(1) was not invoked in this notices for the reasons as arrived by the Commissioner in this order dated 31-12-1998 & upheld by us penalty is not called for & is to be set aside and we find no contumacious conduct or deliberate defiance of law.
(ii) There is force in the plea made that the order has travelled beyond the proposals made in the Show Cause Notice as regards the proposed valuations. A new case cannot be allowed to be set up. Orders travelling beyond the show cause notice are void & are to be set aside.
(iii) The issue of valuation of clearances of an EOU to DTA is well settled by the decision of this Tribunal (See Tata Coffee Limited ; Morarjee Brembana Ltd. , which were citied before the Commissioner but have not been considered by him & before proceeding to Rule 7 or 7A the comparative job values available should have been considered as per decision of this Tribunal in appellant case which is binding in the Commissioner.
(iv) Since binding circulars of the Board & decision of the Tribunal have been ignored. The order cannot be upheld.
(v) The reliance on a proviso of a Central Excise notification to apply in interpret Section 14 of the Customs Act, 1962 & the valuation rules by the Commissioner cannot be upheld. (g) In view of the findings herein in above, the duty demands & the penalty vide order impugned in E/279/2005 cannot be upheld. The order is set aside & thereafter determined the issues. 3. Appeals 1739/2002 & E/279/2005 & application therein disposed in above terms. (Pronounced in Court on 1-7-2005)