2010 (12) TMI 81 - AT - Central Excise

Penalty under rule 25 - Held that - Following the ratio of the decision laid down by the Hon ble High Court in COMMISSIONER OF C. EX. JALANDHAR Versus INDO GERMAN FABS (2006 -TMI - 47973 - HIGH COURT OF PUNJAB & HARYANA), in this case also penalty on the respondent is not leviable under rule 25 of the Central Excise Rules, 2002 in the absence of any mensrea

Summary

Issues:
- Appeal against dropped penalties under Rule 25 of Central Excise Rules, 2004.
- Contention on imposition of penalty under Section 11AC of Central Excise Act, 1944.
- Requirement of mensrea for penalty under Rule 25 of Central Excise Rules, 2002.
- Precedents from Punjab & Haryana High Court and Supreme Court on mensrea for penalty imposition.
- Application of precedents to the current case for penalty imposition under Rule 25.

Analysis:
The appeal was filed by the Revenue challenging the dropped penalties against the respondent under Rule 25 of the Central Excise Rules, 2004. The Revenue argued that even without mensrea, penalties under Section 11AC of the Central Excise Act, 1944 should be imposed. However, the respondent's advocate contended that mensrea is necessary for penalty under Rule 25, citing judgments from the Punjab & Haryana High Court and the Supreme Court. The advocate referred to cases like CCE vs. Indo German Fabs and CCE vs. Sadashiv Ispat Ltd. to support the argument that mensrea is a prerequisite for penalty imposition under Rule 25.

The Tribunal considered the arguments presented by both sides. The Revenue's sole ground for appeal was the imposition of penalties under Rule 25 despite the absence of mensrea. However, the Tribunal referred to the judgments of the Punjab & Haryana High Court in the cases of Indo German Fab and Sadashiv Ispat Ltd., where it was established that the element of mensrea is essential for penalty imposition. Based on these precedents, the Tribunal concluded that since mensrea was not proven, no penalty could be levied on the respondent under Rule 25 of the Central Excise Rules, 2002.

In alignment with the decisions of the High Court, the Tribunal upheld the impugned order and rejected the Revenue's appeal. The Tribunal emphasized that in the absence of mensrea, as per the legal precedents cited, there was no justification for imposing penalties under Rule 25 of the Central Excise Rules, 2002. Therefore, the penalties against the respondent remained dropped, and the appeal by the Revenue was dismissed.