2004 (11) TMI 489 - AT - Central Excise

Summary

Issues:
1. Challenge to penalty and interest imposed for clearance of excisable goods without payment of duty.

Analysis:
The Appellants, represented by Shri Manish Pushkarna, Advocate, did not contest the duty amount confirmed against them for the clearance of Gutka without payment of duty, but challenged the penalty and interest imposed. They relied on a Supreme Court decision in the case of Rashtriya Ispat Nigam to argue that penalty is not applicable if duty is deposited before the show cause notice. On the other hand, Shri Bipin Verma, JDR for the Respondent, argued that since the Appellants did not dispute the duty demand, they admitted the clearance without payment of duty, making them liable for penalty under Rule 25 of the Central Excise Rules, 2002, and interest under Section 11AB of the Central Excise Act.

The Tribunal, after considering both arguments, noted that Rule 25 provides for penalty when excisable goods are removed in violation of the Central Excise Rules. Since the Appellants did not challenge the duty demand, they admitted the clearance without payment of duty, contravening the rules. The Tribunal referred to the Supreme Court case of Zunjarrao Bhikaji Nagarkar, emphasizing that penalty is mandatory for such violations. Additionally, the Tribunal cited the High Court of Allahabad's ruling in Pee Aar Steels (P) Ltd. v. CCE, stating that the timing of the show cause notice does not affect the imposition of penalty. Therefore, the Tribunal held that penalty is applicable, but considering the immediate payment of duty after detection, reduced the penalty amount to Rs. 15,000.

Regarding the interest under Section 11AB of the Central Excise Act, the Tribunal upheld its chargeability. This section mandates charging interest when excise duty is not paid from the due date till the actual payment date. As the Appellants failed to pay duty at the time of goods removal, they were liable for interest as per Section 11AB. Consequently, the Tribunal disposed of the appeal, affirming the penalty imposition and interest charge as per the relevant legal provisions.