2007 (7) TMI 80 - AT - Central Excise

Penalty - Revenue contended that appellant is liable to pay penalty u/s 11AC instead of under Rule 27 of the CER,2002 on the ground that appellant has not pay the duty for the impugned period - Held that revenue contention was not correct and set aside

Summary

Issues:
- Challenge against imposition of penalty under Section 11AC.
- Interpretation of provisions of Section 11AC regarding penalty for short-levy of duty.
- Application of Rule 27 of the Central Excise Rules, 2002 for imposition of penalty.

Analysis:
1. Challenge against imposition of penalty under Section 11AC:
The appeal was directed against the imposition of penalty under Section 11AC by the adjudicating authority and upheld by the Commissioner (Appeals). The appellant contested the penalty, arguing that they were under the impression that Aluminium Dross and Skimming were non-excisable, relying on a Supreme Court decision. They admitted the mistake and discharged the duty liability for the relevant period. The Tribunal noted that the penalty under Section 11AC requires fraud, collusion, wilful misstatement, or suppression of facts to evade duty payment. As the appellant genuinely believed the duty was not payable based on the Supreme Court decision, the Tribunal set aside the penalty under Section 11AC.

2. Interpretation of provisions of Section 11AC regarding penalty for short-levy of duty:
The Tribunal examined the provisions of Section 11AC, which stipulate penalties for non-payment or short-payment of duty due to fraud or wilful misstatement. The Tribunal emphasized that penalties under Section 11AC are applicable only in cases involving intent to evade duty payment through fraudulent means. As the appellant's belief was based on a legal precedent and they rectified the duty payment upon being informed by authorities, the Tribunal concluded that the conditions for invoking Section 11AC penalty were not met, leading to the setting aside of the penalty.

3. Application of Rule 27 of the Central Excise Rules, 2002 for imposition of penalty:
While the Tribunal set aside the penalty under Section 11AC, it acknowledged the appellant's failure to be vigilant in following the law and starting duty payments from a specific date. Consequently, the Tribunal held that the penalty under Rule 27 of the Central Excise Rules, 2002, amounting to Rs. 5,000, was applicable. The Tribunal directed the appellant to immediately deposit the specified penalty amount under Rule 27.

In conclusion, the Tribunal disposed of the appeal by setting aside the penalty imposed under Section 11AC and imposing a penalty of Rs. 5,000 under Rule 27 of the Central Excise Rules, 2002. The judgment highlighted the importance of intent and compliance with legal provisions in determining the applicability of penalties under different statutory provisions in excise law.