2003 (9) TMI 471 - AT - Central Excise

Summary

Issues:
Challenge to penalty imposed under Rule 25 of Central Excise (No. 2) Rules 2001 for delayed payment of duty instalments.

Detailed Analysis:

1. Challenge to Penalty Imposed:
The appellants contested the penalty imposed by the Commissioner (Appeals) under Rule 25 of Central Excise (No. 2) Rules 2001 for delayed payment of duty instalments. The original penalty of Rs. 1 lakh was reduced to Rs. 50,000 by the Commissioner. The appellants sought to set aside the penalty entirely.

2. Contravention of Rule 8:
The appellants argued that they followed the mandate of Rule 8 by eventually paying the due amount, albeit with delays ranging from 4 to 35 days. The department alleged five defaults in payment, leading to the imposition of penalty. The contravention of Rule 8(1) by delayed payments justifies the penalty under Rule 25(1)(a).

3. Precedents and Penalty Imposition:
The appellants cited case laws to argue against penalty imposition, stating that payments were made before the show cause notice issuance. However, the department contended that contraventions cannot be absolved by pre-notice payments. The department emphasized that fortnightly payments are crucial to avoid duty evasion, especially in the case of repeated defaults.

4. Justification for Penalty:
The department argued that the penalty was within statutory limits and justified due to the deliberate contravention of rules. The delay in payment, even if rectified later, could lead to evasion of duty. The series of continuous defaults, including a delay of over 30 days, warranted the penalty imposed.

5. Reduction of Penalty:
While upholding the legality of the penalty, the Tribunal reduced the amount from Rs. 50,000 to Rs. 30,000. This reduction was based on the varying delays in payment for different amounts, with a consideration for the maximum delay of 35 days on a smaller payment.

6. Final Decision:
The appeal was partly allowed, with the Tribunal affirming the imposition of penalty under Rule 25 for delayed duty payments but reducing the penalty amount from Rs. 50,000 to Rs. 30,000 based on the specific circumstances of the case.