2004 (2) TMI 593 - AT - Central Excise

Summary

Issues:
Penalty for failure to pay differential duty on time.

Analysis:
The case involved a penalty imposed on the appellants for failing to pay a differential duty of Rs. 994 on time. The appellants argued that a clerical mistake led to a shortfall in payment. The penalty of Rs. 66,000 was imposed under sub-rule (3) of Rule 173GG, which mandates a penalty of Rs. 500 per day for delayed payment.

The tribunal examined the relevant provision of sub-rule (3) of Rule 173GG, which outlines the penalty for delayed payment of duty. It states that a manufacturer failing to pay duty by the specified date is liable to pay the outstanding amount along with interest and a penalty of Rs. 500 per day. The tribunal noted that the interest on the short-paid amount was subsequently paid, neutralizing any pecuniary advantage gained from the delay in payment. The tribunal emphasized that the penalty imposed should be proportionate to the unpaid amount and the reason for the delay, rather than a fixed amount in every case.

Considering the minimal amount of Rs. 994 remaining unpaid and the recovery of interest, the tribunal deemed the original penalty of Rs. 66,000 excessive. Consequently, the penalty was reduced to Rs. 500, aligning it with the intent of the rule as a facilitation measure. The tribunal allowed the appeal on these grounds, modifying the penalty amount accordingly.