2013 (7) TMI 49 - AT - Central Excise

Penalty under Rule 25 or Rule 27 of Central Excise Rules,2002 - Provisions of Rule 8(3A), as amended by Notification No.13/2006-CE (NT) dated 01.6.2006 - Default in payment of duty of excise - restriction on utilization of cenvt credit - Held that - In the event of any failure to follow the procedure, the goods cleared will be deemed to have been cleared without payment of duty and the consequence and penalties as provided in the Central Excise Rules shall follow. - Ratio of the judgment in the case of PEE DEE Polymers vs. Commissioner of Central Excise 2011 (9) TMI 642 - CESTAT, AHMEDABAD is more appropriately applicable to the facts and circumstances of this case. Accordingly, it is held that imposition of penalty under Rule 25 of the Central Excise Rules, 2002 has been correctly made upon the appellant In favour of Revenue.

Summary

Issues involved:
Appellant's default in payment of duty, imposition of penalty under Rule 25 of Central Excise Rules, 2002, applicability of CESTAT judgments, interpretation of Rule 8(3A) regarding duty payment procedure.

Analysis:
The appellant, engaged in manufacturing Tooth Paste, appealed against OIA No. SKSS/221/DMN/Vapi-I/2010-11, challenging the imposition of penalty under Rule 25 of the Central Excise Rules, 2002. The primary contention was that penalty cannot be imposed based on a previous CESTAT judgment. The issue revolved around the appellant's default in duty payment for February 2008 and subsequent months, totaling Rs. 35,63,359. The appellant failed to pay duty consignment-wise as required by Rule 8(3A) but utilized Cenvat Credit instead. The appellant argued for penalty under Rule 27 only, citing a previous judgment. The respondent, however, relied on a different case to support the imposition of penalty under Rule 25.

The Tribunal analyzed the amended provisions of Rule 8(3A) and highlighted the appellant's obligation to pay duty consignment-wise from the account current. Failure to comply would result in the goods being deemed cleared without duty payment, leading to penalties as per the Central Excise Rules. The Tribunal referenced the judgment in PEE DEE Polymers vs. CCE Ahmedabad, emphasizing the implications of the rule amendment on penalty imposition. The Tribunal distinguished the case from previous judgments, including Tejpal Paper Mills, by citing various cases where penalties under Rule 25 were upheld for similar defaults in duty payment.

Ultimately, the Tribunal upheld the imposition of penalty under Rule 25, in line with the interpretations of Rule 8(3A) and relevant precedents. The appeal by the appellant was rejected, affirming the correctness of the penalty imposed by the lower authorities. The judgment was pronounced on 10/05/2013 by H K Thakur, J.