2007 (8) TMI 538 - AT - Central Excise

Summary

Issues:
Reduction of penalty under rule 26 of Central Excise Rules, 2002.

Analysis:
The case involves an appeal by the Revenue against an order reducing the penalty from Rs. 10,000 to Rs. 6480 imposed on the respondent. The respondent was found transporting chewing tobacco without proper documentation, leading to the seizure of goods and imposition of penalty under rule 26 of the Central Excise Rules, 2002.

The respondent was intercepted while driving a jeep with contraband goods, and it was established that he was involved in transporting the goods without valid documents, knowing they were liable to be confiscated. The penalty of Rs. 10,000 was initially imposed by the adjudicating authority under rule 26 of the Central Excise Rules, 2002.

The department's representative argued against the reduction of penalty, citing the provisions of rule 26 which specify penalties for offenses related to excisable goods. Rule 26 mandates a penalty not exceeding the duty on the goods or Rs. 10,000, whichever is greater. This provision establishes a minimum penalty of Rs. 10,000, even if the duty liability is less than that amount, as authorized by Section 37(5) of the Central Excise Act, 1944.

The appellate tribunal found that the reduction in penalty by the Commissioner (Appeals) was unjustified, as rule 26 clearly sets a minimum penalty of Rs. 10,000. Therefore, the impugned order reducing the penalty was set aside, and the penalty imposed by the adjudicating authority was restored. Consequently, the appeal by the Revenue was allowed, reinstating the original penalty amount.

In conclusion, the judgment highlights the strict application of penalty provisions under rule 26 of the Central Excise Rules, emphasizing the minimum penalty requirement even in cases where the duty liability is less than Rs. 10,000. The decision underscores the authority's power to impose penalties in excise-related offenses and the importance of adhering to statutory provisions in such matters.