2012 (11) TMI 121 - AT - Central Excise

Penalty u/s 11AC - Commissioner set aside penalty - Held that - The entire proceedings were as per Rule 8 and penalty is leviable as per the provisions of Rule 8(3A) which does not provide for penalty under section 11AC - Rule 8(3A) does not provide penalty under section 11AC - in favour of assessee.

Summary

Issues:
- Appeal against imposition of penalty under section 11AC
- Interpretation of Rule 8(3A) of the Central Excise Rules
- Applicability of penalty provisions under Rule 25(1)(a) of the Rules

Analysis:

1. Appeal against imposition of penalty under section 11AC:
The Revenue filed an appeal against the Order-in-Appeal upholding the lower adjudicating authority's decision to not impose a penalty under section 11AC of the Central Excise Act, 1944. The Revenue contended that the assessee deliberately violated rules with a mala fide intention to evade duty, justifying the penalty under section 11AC. However, the Commissioner(Appeals) found no suppression of facts to warrant such a penalty. The Tribunal noted the Commissioner's findings and concluded that the penalty under section 11AC was not applicable in this case.

2. Interpretation of Rule 8(3A) of the Central Excise Rules:
The Tribunal examined the provisions of Rule 8(3A) of the Central Excise Rules, which state that default in duty payment beyond thirty days deems goods to be cleared without payment, leading to consequences and penalties as per the rules. The Commissioner determined that the case did not involve deliberate deception to evade duty as outlined in section 11AC. Instead, the violation fell under Rule 8(3A), necessitating a penalty under Rule 25(1)(a) for contravening Rule 8(3A). The Tribunal concurred with this interpretation, emphasizing that Rule 8(3A) did not provide for penalties under section 11AC.

3. Applicability of penalty provisions under Rule 25(1)(a) of the Rules:
The Tribunal clarified that the penalty imposed under Rule 25(1)(a) for violation of Rule 8(3A) was justified based on the Commissioner's findings. The adjudicating authority had already levied a penalty, which the Tribunal saw no reason to interfere with. As the proceedings were conducted in accordance with Rule 8, the Tribunal upheld the penalty under Rule 25(1)(a) while dismissing the Revenue's appeal against the absence of a penalty under section 11AC.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing that the penalty provisions under section 11AC were not applicable in the case, and the penalty under Rule 25(1)(a) for violating Rule 8(3A) was upheld as per the Commissioner's decision. The judgment highlighted the importance of interpreting specific rules and provisions accurately to determine the appropriate penalties in excise duty cases.