2010 (7) TMI 385 - AT - Central Excise

Penalty Payment of duty Fortnightly payment Default in payment beyond 30 days - failure on the part of the assessee would meet with the penal provisions as contained in the Rules - no substantive change in the wordings of Rule 8 and learned DR having not been able to show any contradictory judgment, I follow the Tribunal decision in the case of Saurashtra Cement Limited - Penalty reduced to Rs. 5000/- in terms of Rule 27

Summary

Issues:
Violation of Rule 8 of Central Excise Rules, 2002 - Default in payment of excise duty beyond 30 days - Correctness of penalty imposed under Section 11AC of the Central Excise Act, 1944 - Applicability of Rule 25 and Rule 27 for penalty imposition.

Detailed Analysis:

1. The appellants, engaged in manufacturing excisable items, defaulted in payment of excise duty for more than 30 days from the due date, violating Rule 8 of Central Excise Rules, 2002. The show cause notice demanded duty clearance-wise for the period of default. The appellants paid the duty subsequently, but due to an error in the TR-6 Challans, the lower authorities did not accept the payment, leading to the confirmation of duty and imposition of penalty under Section 11AC.

2. The Commissioner (Appeals) acknowledged the cash payment by the appellants, albeit under the wrong minor head, as payment of excise duty. He opined that the penalty imposed was harsh considering the payment of the entire duty, and thus, reduced the penalty amount. The reduced penalty was challenged before the Tribunal.

3. The Tribunal referred to a previous case where it was observed that penalties for delayed duty payment should be imposed under Rule 27 instead of Rule 25. Rule 25 pertains to contraventions not applicable in the present case, as the goods were duly recorded, and duty was paid subsequently. The Tribunal's decision was supported by other cases, emphasizing that delays due to financial crises do not warrant penalties under Rule 25.

4. The Revenue argued that subsequent amendments to Rule 8 introduced stricter provisions for default in duty payment, citing relevant judgments to support penalty imposition. However, the Tribunal noted that the consequences of failure to pay duty under the amended Rule 8A were similar to the previous provisions. It emphasized that penalties should be imposed in accordance with the Rules, not the Acts.

5. Considering the arguments and precedents, the Tribunal upheld the applicability of Rule 27 for penalty imposition, reducing the penalty amount to Rs. 5000 in line with previous decisions. It noted that the Tribunal's decision in a similar case applied even after the Rule amendments, as there were no significant changes in the relevant provisions. The appeals were disposed of accordingly.

6. The Tribunal's decision in this case reaffirmed the interpretation of penalty provisions under Rule 27 for delayed duty payments, emphasizing consistency with previous judgments and the lack of substantive changes in the relevant rules despite amendments.