2012 (1) TMI 164 - HC - Central Excise

Summary

Issues involved: Allegation of default in payment of central excise duty, imposition of penalty, interpretation of Rule 8(3) of the Central Excise Rules, appeal against dropping of penalty.

The judgment dealt with the case where the assessee was alleged to have defaulted in payment of central excise duty for a specific period. Upon discovering the default, the assessee promptly paid the duty along with interest. Subsequently, a show cause notice was issued seeking recovery of the duty, interest, and penalty. The notice relied on Rule 8(3) of the Central Excise Rules, outlining the consequences of non-payment of duty by the due date.

The Commissioner of Central Excise, after considering the reply filed by the assessee, concluded that no penalty would be levied due to the payment of outstanding duty and interest before the show cause notice was issued. Consequently, the Commissioner dropped further proceedings against the assessee. The Revenue, feeling aggrieved, appealed to the Tribunal.

The Tribunal upheld the Commissioner's decision, emphasizing that since the assessee had voluntarily paid the duty and interest prior to the show cause notice, no penalty should be imposed. The Tribunal rejected the Revenue's appeal. Subsequently, the Revenue appealed to the High Court.

The High Court, upon review, concurred with the decisions of the Commissioner and the Tribunal. It noted that the assessee's early payment demonstrated no mala fide intention to evade duty and interest. Therefore, the Court found no justification to interfere with the Tribunal's ruling. It was opined that no substantial question of law arose for consideration, and the appeal was dismissed.