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2011 (4) TMI 689 - AT - Central ExciseDelayed payment of duty - Payment of duties -Penalty under rule 25 - The original authority imposed penalty under Rule 25 of Central Excise Rules,2002 - the appellant is a company in small scale sector and due to acute financial crisis faced by them there was delay in part payment of duties for three months. She submits that the entire duty has since been paid - Therefore, no penalty is not imposable under Rule 25 of Central Excise Rules, 2002. Penalty under Rule 27 - It is only a case of delayed payment due to financial crisis as explained on behalf of the assessee, I hold that the penalty is imposable only under Rule 27 of the Central Excise Rules, 2002.
Issues: Default in part payment of duties, imposition of penalty under Rule 25 of Central Excise Rules, 2002, financial crisis causing delay in payment, applicability of penalty under Rule 27, reduction of penalty amount.
Analysis: 1. The appellant defaulted in part payment of duties for three months, totaling Rs.3,76,203. The original authority imposed a penalty under Rule 25 of Central Excise Rules, 2002, and ordered the forfeiture of the facility of monthly duty payment for two months. The Commissioner (Appeals) upheld the penalty and noted non-payment of interest on delayed payment till the impugned order date. 2. The appellant, a small-scale company facing financial crisis, explained the delay in payment due to financial difficulties. The entire duty has been paid, along with the interest amount. Citing legal precedents, the appellant argued against the imposition of penalty under Rule 25, emphasizing that goods were recorded, cleared, and part payments made despite the financial crisis. 3. The Tribunal considered the appellant's financial crisis explanation for the delayed payment and held that the penalty should be imposed under Rule 27 instead of Rule 25. Recognizing the default across three months, the Tribunal reduced the penalty from Rs.3,76,203 to Rs.15,000, at Rs.5,000 for each default instance. The Tribunal allowed the appeal based on the circumstances and converted the penalty under a different rule. 4. In conclusion, the Tribunal allowed the appeal, reducing the penalty amount significantly due to the financial crisis explanation provided by the appellant. The judgment highlights the importance of considering the circumstances leading to default and the applicability of different penalty rules based on the situation.
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