2009 (12) TMI 798 - AT - Central Excise

Summary

Issues:
- Appeal against order-in-appeal setting aside penalty under Rule 25(1)(a) of Central Excise Rules, 2002.
- Interpretation of provisions of Rule 8 of Central Excise Rules, 2002 regarding payment of duty.
- Application of penalty under Rule 25(1)(a) for default in duty payment.

Analysis:
1. The appeal was filed by the Revenue against the order-in-appeal setting aside the penalty imposed under Rule 25(1)(a) of the Central Excise Rules, 2002 by the Deputy Commissioner. The Respondent had defaulted in payment of duty for September and October 2006, leading to a penalty of Rs. 69,889 being imposed. However, the penalty was set aside by the Commissioner (Appeals) based on a Tribunal judgment. The Revenue contended that the penalty was rightly imposed due to the default in duty payment.

2. The key issue revolved around the interpretation of Rule 8 of the Central Excise Rules, 2002. Sub-rule (1) of Rule 8 mandated the payment of duty on goods removed from the factory by the 5th of the following month. Sub-rule (3) of Rule 8 stipulated that failure to pay duty by the due date would result in the goods being deemed as cleared without payment of duty if the outstanding amount was not paid within one month from the due date. The Deputy Commissioner imposed the penalty under Rule 25(1)(a) based on these provisions.

3. The Tribunal analyzed the facts and provisions of Rule 8, concluding that the duty short paid for September and October 2006 was not paid along with interest even within the grace period of one month from the due date. Therefore, the clearances of goods during these months were treated as without payment of duty, attracting the penal provisions of Rule 25(1)(a) of the Central Excise Rules. The Tribunal held that the penalty should not have been set aside by the Commissioner (Appeals) and allowed the Revenue's appeal, restoring the Assistant Commissioner's order.

4. The Tribunal distinguished the case cited by the Commissioner (Appeals) where penalty under Rule 27 had been imposed, emphasizing that in the present case, the penalty under Rule 25(1)(a) was correctly applied due to the default in discharging monthly duty liability. Additionally, another Tribunal judgment was referenced to support the imposition of penalty under Rule 25(1)(a) in similar circumstances. The Tribunal's decision was based on a strict interpretation of the Central Excise Rules and the consequences of non-payment of duty within the specified time frame.

5. In conclusion, the Tribunal set aside the order-in-appeal and restored the penalty imposed by the Assistant Commissioner under Rule 25(1)(a) of the Central Excise Rules, ruling in favor of the Revenue. The judgment emphasized the importance of timely payment of duty as per the provisions of the law to avoid penalties for non-compliance.