2009 (12) TMI 740 - AT - Central Excise

Summary

Issues:
Confirmation of penalties under Section 11AC on the appellant company and under Rule 26 of Central Excise Rules, 2002 on their Finance Manager.

Analysis:
The case involved penalties imposed on the appellant company and their Finance Manager under Section 11AC and Rule 26 of the Central Excise Rules, 2002. The appellant company was availing the facility of fortnightly payment of Central Excise duty under Rule 8. The issue arose when a vehicle loaded with goods was intercepted, revealing discrepancies in dates on the accompanying documents. The officers detained the goods and vehicles, issued a show-cause notice, and confirmed duty, interest, and penalties. The Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal.

The appellant's representative argued that the invoices were prepared on 30-6-2001 to meet sales targets for better loan facilities and that duty payment was made on 12-7-2001, within a reasonable timeframe. He contended that there was no allegation of goods being cleared without duty payment or of clandestine removal. Citing a precedent, he claimed that penalties under Section 11AC were not applicable for delayed payments under the fortnightly scheme without any mala fide intention to evade duty.

The Departmental Representative countered that the appellant had a history of delayed duty payments, indicating an intention to underpay duty, justifying the penalties imposed. After hearing both sides, the Tribunal analyzed Rule 8 of the Central Excise Rules, which mandated duty payment by the 20th of the month for goods removed in the first fortnight and by the 5th of the following month for goods removed in the second fortnight. As the duty was paid by 12-7-2001 for goods removed on 11-7-2001, within the permissible timeframe, the Tribunal concluded that there was no intention to evade duty. Noting the absence of allegations of clandestine removal, the Tribunal ruled that penalties under Section 11AC were not applicable. Consequently, the appeals by the appellants were allowed, with any consequential relief granted.

In conclusion, the Tribunal found that the appellant had complied with duty payment timelines as per Rule 8, dismissing the penalties imposed under Section 11AC due to the absence of intent to evade duty and the timely payment of duty within the prescribed period.