2010 (1) TMI 1083 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty under Rule 25 of Central Excise Rules for non-payment of duty within the due date.
2. Consideration of financial difficulties as a reason for delay in payment.
3. Application of penalty under Rule 27 of Central Excise Rules.

Analysis:
1. The appeal involved a dispute regarding the imposition of a penalty under Rule 25 of the Central Excise Rules for non-payment of duty within the due date. The respondent, a manufacturer of stainless steel billets, failed to pay the required duty by the specified date, leading to the Department proposing a penalty. The original authority imposed a penalty, which was later set aside by the Commissioner (Appeals) based on the argument that the duty shortfall was not intentionally withheld or suppressed. The Department contended that the penalty should be upheld as the clearances were considered non-duty paid due to the delayed payment.

2. The respondent attributed the delay in payment to financial difficulties and unforeseen circumstances, emphasizing that there was no intention to evade duty. The Advocate for the respondent argued that all clearances were duly recorded, and the duty, along with interest, was paid before the Commissioner's decision. Citing financial constraints, the respondent requested leniency, which was considered by the Commissioner (Appeals) in setting aside the penalty. The Tribunal acknowledged the explanation provided by the respondent regarding the financial challenges faced, leading to a decision on the penalty under Rule 27 of the Central Excise Rules.

3. The Tribunal, after careful consideration of submissions from both sides and a review of the case records, concluded that while the delay in payment did not involve deliberate evasion, it constituted a clearance without duty payment. The Tribunal noted that the Department could have seized the goods for non-duty paid clearances but did not do so in this case. Consequently, the Tribunal modified the penalty from Rs. 4,00,000 to Rs. 5,000 under Rule 27 of the Central Excise Rules, 2002, recognizing the unintentional nature of the default while upholding the imposition of a penalty for deemed removal without payment of duty.

In summary, the judgment addressed the issues of penalty imposition under Rule 25, consideration of financial difficulties for delayed payment, and the application of penalty under Rule 27 in cases of unintentional non-payment of duty, ultimately modifying the penalty amount based on the circumstances presented during the proceedings.