Purolator India Ltd. v. Collector Of Central Excise, New Delhi

[Order per : V.K. Agrawal, Member (T)]. - The issue involved in this appeal, filed by M/s. Puralator India Ltd. is whether penalty is imposable on them.

2. Shri R. Swaminathan, ld. Advocate submitted that they were manufacturing car heater assembly out of the major raw-materials provided by Maruti Udyog Limited (MUL). The raw materials were sent to them by MUL under provisions of Rule 57F(2), as it stood at the relevant time. The general permission had been given by the Assistant Collector to MUL for sending the inputs to them, which is evident from a letter dated 16-7-1986 of the Assistant Collector of Central Excise, Rohtak. In addition to the inputs received from MUL, they were also using certain other inputs and after manufacturing car heater assembly sending it to MUL under the challans received from Maruti along with the inputs. The Collector of Central Excise, under the impugned order, confirmed the demand of Rs. 20,23,887.15 and imposed a penalty of Rs. 20,000/-. The duty confirmed has already been paid by them and MUL has taken Modvat credit under Rule 57A. The ld. Advocate submitted that there has been no Revenue loss to the Government of India and by not following the excise procedure, they have not gained anything and as such, there was no intention by them in not paying the duty to the department. He relied upon the decision in the case of C.C.E. v. Chloride Industries Ltd. (Final Order No. A-1018/CAL/1997, dated 13-8-1997) in which it was held that where the duty paid is available as Modvat credit to the manufacturer of the final product, the question of appellants evading payment of duty does not arise. He also mentioned that the Tribunal in the case of Engineers Combine v. C.C.E., New Delhi - Final Order No. 357/99-A, dated 22-3-1999) held that the penalty is not imposable if there is no revenue loss in the real sense. Finally, he relied upon the decision of the Supreme Court in the case of C.C.E. v. H.M.M. Ltd. reported in (S.C.) in which it was held that penalty is not imposable unless the department is able to sustain show cause notice, which was under challenge on the ground of limitation.

3. Countering the arguments, Shri Ashok Kumar ld. JDR, submitted that the appellants had neither declared the manufacturing activity to the department nor taken out any Central Excise licence. They had also not maintained statutory records as required under the law. The activity of manufacturing of car heater assembly by the appellants came to the light only after the visit of the Central Excise officers to their factory premises. He finally submitted that the penalty had not been imposed for non-payment of duty and penalty has been imposed only for not following the procedure as prescribed in the Central Excise Rules.

4. We have considered the submissions of both the sides. It is settled law that for imposition of penalty, the guilty intention of the person is not a pre-requisite. If provisions of the law have been violated, penalty can be imposed. However, facts and circumstances of each case have to be taken into consideration before imposing the penalty. In the present matter, the appellants are getting the main raw materials (inputs) from MUL for the purpose of assembly of car heater and in that they were utilising certain materials of their own. They were sending car heater assembly back to the MUL which was fitted in the motor vehicle manufactured by them. They were bona fidely working under the impression that the goods have been received under the procedure prescribed under Rule 57F(2) and the necessary permission has been obtained from the department by MUL. Taking into consideration all the facts and circumstances of the case, we are of the view that no penalty is imposable in the present matter. We, accordingly allow the appeal.