2010 (9) TMI 1029 - AT - Central Excise

Summary

Issues involved: Default in payment of duty, imposition of penalty under Rule 25, reduction of penalty by Commissioner (Appeals), submissions by both parties, consideration of violations under Rule 27.

In this case, the appellant defaulted in payment of duty for four months, leading to a show cause notice demanding duty, interest, and penalty under Rule 25. The appellant paid the duty and interest in August 2007. The original authority confirmed the duty demand, interest, and imposed a penalty of Rs. 4,68,723 under Rule 25. On appeal, the penalty was reduced to Rs. 1 lakh by the Commissioner (Appeals) due to lack of mala fide intent to evade duty.

The appellant's advocate argued that the financial crisis led to the default, and there was no violation warranting penalty under Rule 25, suggesting that penalty under Rule 27 would be more appropriate. It was also contended that since goods were cleared under proper documentation, Rule 25 violations did not apply.

The SDR contended that despite leniency shown by the Commissioner (Appeals), the default in payment for several months warranted upholding the penalty.

After considering the submissions and records, it was acknowledged that there was indeed a default in duty payment for four months, which was rectified in August 2007. While the goods were cleared and returns filed, the duty was not paid on time, constituting separate violations under Rule 27. The lack of intent to evade duty was recognized. Consequently, the penalty was reduced to Rs. 20,000, at Rs. 5,000 per default, under Rule 27.

In conclusion, the penalty imposed by the Commissioner (Appeals) was modified and reduced, taking into account the circumstances of the case. The appeal was disposed of accordingly.