2009 (3) TMI 994 - AT - Central Excise

Summary

Issues involved: Imposition of penalty u/s Rule 25 of Central Excise Rules for delayed payment of duty, justification of penalty imposition, applicability of Rule 27 of Rules in case of delay in discharge of duty liabilities.

The judgment addresses the issue of penalty imposition u/s Rule 25 of Central Excise Rules for delayed payment of duty. The appellant argued that penalty was unjustified as there was no intention to evade duty, and the delay was due to loss of records in a flood. The appellant cited a previous Tribunal decision to support the contention that penalty under Rule 25 cannot be imposed for delay in discharge of duty liabilities. On the other hand, the JCDR argued that duty and interest were paid after a significant delay and only after being pointed out by an audit. The Tribunal noted that the goods were properly accounted for and cleared under Central Excise invoices, and considering the circumstances of the flood causing record loss, the appellant cannot be faulted for the delay in payment. The Tribunal referred to the decision in the case of Saurashtra Cement Ltd., which held that in cases of delay in payment of duty, Rule 27 should be invoked instead of Rule 25. Accordingly, the penalty was reduced to &8377; 5,000 from the original amount imposed. The appeal was rejected except for the modification in the penalty amount.

The judgment clarifies the applicability of Rule 27 of Central Excise Rules in cases of delay in discharge of duty liabilities. It emphasizes that in situations where there is a delay in payment of duty, Rule 27 should be invoked instead of Rule 25 for penalty imposition. The Tribunal's decision in this case aligns with the precedent set by the Saurashtra Cement Ltd. case, which established that for delays in duty payment, the provisions of Rule 27 should be followed. The reduction of the penalty amount to &8377; 5,000 from the initial penalty imposed further underscores the Tribunal's adherence to the principles outlined in Rule 27 for penalty determination.