2008 (5) TMI 538 - AT - Central Excise

Summary

Issues:
Imposability of penalty under Section 11AC of the Central Excise Act or Rule 25 of the Central Excise Rules, 2002.

Analysis:

Issue 1: Imposability of Penalty under Section 11AC of the Central Excise Act or Rule 25 of the Central Excise Rules, 2002.

The appeal involved a dispute regarding the imposability of penalty under Section 11AC of the Central Excise Act or Rule 25 of the Central Excise Rules, 2002. The Revenue contended that due to delayed payment of duty, the respondent was liable for penalty under the second proviso to sub-rule (3) of Rule 8 of the Central Excise Rules. It was highlighted that failure to pay duty by the due dates would result in the assessee being liable to pay the outstanding amount along with interest. The Commissioner (Appeals) opined that since the duty was paid before the issuance of a show-cause notice, there was no intention to evade payment of duty, and hence, penalty was not imposable under Section 11AC of the Act or Rule 173Q of the erstwhile Rules corresponding to Rule 25(1) of the 2002 Rules. The Commissioner referred to a Board's Circular dated 15-12-2003 to support this view.

Issue 2: Discretionary Power of the Commissioner (Appeals) in Imposing Penalty

The Tribunal, while acknowledging the delay of 42 days in paying the duty and the subsequent payment of interest by the respondent, noted that there was no evidence to suggest an intention to evade payment of duty. Although the second proviso to Rule 8(3) stipulated penalties for delayed payment, it was emphasized that penalties need not be imposed in every case. The Tribunal cited decisions of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa and State of Madhya Pradesh v. Bharat Heavy Electricals to support the exercise of discretion by the Commissioner (Appeals) in not imposing a penalty. Despite differing views in other cases, the Tribunal found no reason to interfere with the Commissioner's order, deeming the exercise of discretion as rational and not arbitrary.

In conclusion, the Tribunal dismissed the appeal, finding no merit in the Revenue's arguments. The judgment upheld the Commissioner (Appeals)'s decision not to impose a penalty despite the delayed payment of duty, emphasizing the importance of considering the circumstances and intentions of the parties involved in such cases.