2010 (2) TMI 1007 - AT - Central Excise

Restoration of penalty - failure to make monthly payments of duty from PLA - Rule 8(3) of the CER, 2002 - Held that - Rule 25(a) covers the clearances of excisable goods in contravention of the provisions of any Rule or notification. The instant case is covered by Rule 25(a) - In case of the infractions enumerated in the Rule 25, an assessee shall be liable to penalty not exceeding the duty on the excisable goods in respect of which contravention mentioned in clause (a) has been committed or ₹ 2000/- whichever is lesser. Appellant made payment of duty due along with interest for the delay in such payments subsequently. This was before the issue of SCN. Since the respondents had contravened provisions of Rule 8(3), it deserved a penalty for the infraction committed - In the instant case, therefore, the competent authority could have imposed penalty equal to the duty not paid or a lower penalty not less than ₹ 2000/- as per Rule 25(a). Appeal dismissed - decided against appellant.

Summary

Issues:
- Appeal against penalty imposition for failure to make monthly duty payments as per Central Excise Rules, 2002
- Interpretation of penalty under Section 11AC of the Central Excise Act
- Application of Rule 25 for penalty calculation

Analysis:
1. The appeal was filed by the Revenue challenging the reduction of penalty imposed on the respondent for failure to make monthly duty payments from PLA as required by Rule 8(3) of the Central Excise Rules, 2002. The original authority confirmed duty liability against the respondent and imposed a penalty equal to the duty under Section 11AC of the Central Excise Act. However, the Commissioner (Appeals) modified the penalty to Rs. 25,000, leading to the Revenue's appeal. The Revenue argued that Section 11AC mandates a penalty equal to the duty evaded, citing the decision in UOI v. Dharamendra Textile Processors. The Tribunal noted the respondent's delayed duty payments but found no intention to evade payment, as the duty was paid along with interest before the show cause notice was issued. The Tribunal upheld the reduced penalty of Rs. 25,000, considering the circumstances and Rule 25 provisions for penalty calculation.

2. In the absence of representation from the respondent, the Tribunal considered the case where excisable goods were cleared by debiting duty from the Cenvat account instead of PLA for a few months. The respondent later paid the due duty with interest before the show cause notice. The Tribunal observed that Rule 25 provides for confiscation and penalty in cases of contravention of Central Excise Rules. Specifically, Rule 25(a) covers clearances of excisable goods in contravention of rules or notifications. The rule allows for a penalty not exceeding the duty evaded or Rs. 2000, whichever is lower. In this instance, the Tribunal found that the respondent's actions constituted a delay in duty payment rather than an intentional evasion. Considering the circumstances, the Tribunal deemed the penalty of Rs. 25,000 imposed by the Commissioner (Appeals) as appropriate and fair, leading to the rejection of the Revenue's appeal.

This detailed analysis highlights the Tribunal's interpretation of penalty provisions under Section 11AC and Rule 25, emphasizing the importance of intention and compliance with duty payment requirements in determining penalty amounts.