2008 (12) TMI 507 - AT - Central Excise

Summary

Issues involved: Duty demand under proviso to Section 11A(2) of Central Excise Act, 1944, penalty imposed under Rule 25 of Central Excise Rules, 2002, and penalty on the respondent Director.

The judgment by the Appellate Tribunal CESTAT, NEW DELHI involved a case where duty demand of Rs. 1,99,917/- was confirmed against M/s. Acchyut Packaging Pvt. Ltd. under proviso to Section 11A(2) of Central Excise Act, 1944. Additionally, penalties of Rs. 10,000/- on Acchyut Packaging Pvt. Ltd. under Rule 25 of Central Excise Rules, 2002, and Rs. 2,500/- on the respondent Director were imposed. The Commissioner (Appeals) dismissed the Deptt.'s review appeal, stating that Rule 26 sets the maximum limit of penalty, below which the quantum of penalty is discretionary. The Revenue appealed against this decision.

In response to the appeal, the ld. DR argued that as per Section 26 of Central Excise Rules, the minimum penalty to be imposed is Rs. 10,000/-, making the penalty of Rs. 2,500/- on the respondent incorrect.

On the other hand, the respondent's counsel contended that Rule 26 specifies the upper limit for penalty, not a minimum penalty. Therefore, there was no merit in the Revenue's appeal.

Upon careful consideration, the Tribunal analyzed Rule 26 of Central Excise Rules, which states that the penalty imposed should not exceed the duty on the goods or Rs. 10,000/-, whichever is greater. The Tribunal noted that this rule sets an upper limit for the penalty, with the actual quantum being discretionary. The Tribunal highlighted that if the rule had specified the penalty as "equal to" instead of "not exceeding," the Revenue's argument would have been valid. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it.

(Order dictated and pronounced in the open Court)