2011 (8) TMI 346 - AT - Central Excise

Penalty under the provisions of Rule 25 of Central Excise Rules, 2002 - whether equivalent amount of penalty has to be imposed on the appellant under Rule 25 of Central Excise Rules, 2002 or the same can be reduced - There is no dispute that the appellant had discharged duty liability on clearances made during the period January 2008 to March 2008, albeit through RG23 A Part II i.e. CENVAT account - It is also not in dispute that the appellant had enough balance in RG23A Part II to discharge duty liability - At the same time, we also find that debiting RG 23A Part II was no good as discharge of duty, but there is no default of payment of duty, which is found in this case as the appellant had not paid duty liability for the month of November 2007. The appellant has rectified the error by debiting the amount through PLA towards discharge of duty liability. We consider the error of debiting the CENVAT account during the period January 2008 to March 2008 as mere technical lapse and reduce the penalty imposed by adjudicating authority to Rs.5,000/- (Rupees Five Thousands only) under Rule 25 of Central Excise Rules, 2002.

Summary

Issues:
Imposition of penalty on the appellant under Rule 25 of Central Excise Rules, 2002 for violation of discharge of duty liability as amended under Rule 8 of Central Excise Rules, 2002.

Analysis:
The appeal was directed against Order-in-Appeal No.399/2009 (Ahd-III)/KCG/CE/Commr(A), dated 23.12.09. The issue revolved around the imposition of a penalty on the appellant under Rule 25 of Central Excise Rules, 2002, for failing to discharge duty liability as amended under Rule 8 of the same rules. The appellant had defaulted on duty payment for November 2007, leading to consignment-wise discharge of duty liability from January 2008 to March 2008. The appellant contested the Show Cause Notice, but both the adjudicating authority and the first appellate authority ruled against the appellant. The appellant eventually deposited the entire duty amount through account current during the Stay Petition before the Tribunal.

The appellant's counsel argued that the penalty imposed was unwarranted, citing a Tribunal decision in a similar case. The Senior Departmental Representative (SDR) highlighted the provisions of Rule 8, emphasizing the consequences and penalties as per the Central Excise Rules, 2002. After considering both sides' submissions, the Tribunal deliberated on whether an equivalent penalty was justified under Rule 25 or if a reduction was appropriate.

Upon reviewing the records, it was established that the appellant had indeed discharged duty liability for clearances from January 2008 to March 2008 through RG23 A Part II CENVAT account, with sufficient balance for the same. However, debiting the CENVAT account was deemed a technical lapse, as the duty for November 2007 had not been paid initially. The appellant rectified the error by debiting the amount through PLA for duty liability discharge. The Tribunal considered the debiting error a mere technical lapse and reduced the penalty imposed by the adjudicating authority to Rs. 5,000 under Rule 25 of Central Excise Rules, 2002.

In conclusion, the appeal was disposed of with consequential relief granted to the appellant, as the Tribunal found the penalty reduction appropriate given the circumstances of the case.