2014 (2) TMI 1192 - HC - Central Excise

Penalty under Rule 27 - Delay in making duty payment - Held that - Tribunal has allowed the entire appeal of the petitioner and the penalty imposed under Rule 25 has been quashed. However, admittedly, as there was delay in deposit of the duty, the general penalty clause under Rule 27 is enforced and a general penalty of ₹ 2,000/- was imposed for each default. In doing so, no error has been committed by the Tribunal which warrants interference - Neither, any prejudice caused was demonstrated or established before us nor is any illegality pointed in the matter of imposing general penalty under Rule 27. Admittedly, the appellant had committed a delay in deposit of the duty and if the duty was not deposited within the stipulated period, the general penalty under Rule 27 could be imposed and in doing so, as no illegality is committed and no breach of statutory provision is established, that being so, we see no reason to interfere into the matter. - Decided against assessee.

Summary

Issues:
Challenge against penalty imposed under Rule 27 of Central Excise Rules, 2002 without proper notice under Rule 25.

Analysis:
The appellant, a manufacturer of Handmade Biris, appealed against the penalty imposed under Rule 27 of the Central Excise Rules, 2002, without proper notice under Rule 25. The appellant contended that the penalty was imposed without issuing a notice under Rule 27, making it unsustainable. Initially, a show-cause notice was issued for delayed payment of duty under Rule 8(3), proposing a penalty under Rule 25 equivalent to the duty amount. The penalty was later reduced to &8377; 2,00,000 on appeal before the Commissioner (Appeals). Subsequently, the Tribunal found no mala fide intention for the delayed payment but imposed a general penalty under Rule 27 due to non-compliance with the statutory duty payment period, amounting to &8377; 2,000 per default.

The appellant argued that the penalty under Rule 27 was impermissible as the show-cause notice was issued under Rule 25. However, the Assistant Commissioner had already imposed a penalty under Rule 25, which was later reduced on appeal. The Tribunal quashed the penalty under Rule 25 but enforced a general penalty under Rule 27 due to the duty payment delay. The High Court found no error in the Tribunal's decision, stating that no illegality or breach of statutory provision was established. The Court dismissed the appeal, noting that no question of law arose for consideration.

In response to the appellant's argument that the imposition of penalty under Rule 27 was unjust, the Court found no demonstration of prejudice or illegality in imposing the general penalty. As the duty payment delay occurred, the Court upheld the Tribunal's decision to impose the general penalty under Rule 27. The Court concluded that since no illegality or breach was established, there was no basis for interference in the matter.