2011 (3) TMI 982 - AT - Central Excise

Quantum of penalty - Defaulted in monthly payment of duty - provisions of Rule 8(3A) of Central Excise Rules, 2002 - The duty of goods in question was paid from the cenvat account - The appellant submits that the issue is no more res-integra and stands settled by the precedent decisions of the Tribunal - To the same effect is another decision of the Tribunal in the case of CCE, Allahabad v. R.K. Cigarettes (P) Ltd. that where returns are filed showing clearances and amounts of duty payable, there cannot be any mala fide intention to evade payment of duty. In such a scenario penalty under Rule 27 gets attracted - As such, submits the learned advocate that imposition of penalty of Rs.1 lakh in terms of the provisions of Rule 25 is not justified - The issue is settled the penalty is reduced to Rs.5,000/- Stay petition as also appeal get disposed off

Summary

Issues:
- Default in monthly payment of duty
- Clearance of goods without payment of duty
- Adjudication of demand of duty
- Restoration of credit of duty paid from cenvat account
- Imposition of penalty

Analysis:
The judgment by the Appellate Tribunal CESTAT, Ahmedabad dealt with the issue of default in monthly payment of duty by the appellants, leading to the clearance of goods without payment of duty. The facts of the case revealed that the duty for the goods in question was paid from the cenvat account, contrary to the provisions of Rule 8(3A) of Central Excise Rules, 2002. Consequently, a show cause notice was issued, resulting in the adjudication of the demand of duty to be paid from the current account along with interest and equivalent penalty. The original adjudicating authority also considered the duty paid from the cenvat account as non-payment and imposed penalties in both cases.

The order of the original adjudicating authority was challenged before the Commissioner (Appeals), who allowed the restoration of the credit of duty paid earlier from the cenvat account but upheld the imposition of penalty upon the appellant. The appellant primarily contested the quantum of penalty, arguing that the imposition of a penalty of Rs.1 lakh under Rule 25 was not justified. The appellant relied on precedent decisions of the Tribunal to support the contention that for default in payment of duty on a fortnightly basis, the provisions of Rule 27 should apply, which provide for a maximum penalty of Rs.5000. Therefore, the appellant requested a reduction of the penalty to Rs.5000.

The Tribunal referred to previous decisions, including the case of Shaligram Laminates Pvt. Ltd. Vs. CCE Ahmedabad, where it was established that in cases where goods are cleared under the cover of invoices and the only default is a delay in payment of duty, the provisions of Rule 27 should be applied. This rule prescribes a maximum penalty of Rs. 5,000 in such scenarios where there is no fraudulent intent to evade duty payment. Consequently, the Tribunal reduced the penalty to Rs. 5,000 based on the facts of the case and the absence of mala fide intention to evade duty payment. As the issue was settled, the penalty was adjusted accordingly, and the stay petition and appeal were disposed of in the mentioned manner.