2013 (12) TMI 690 - AT - Central Excise

Clandestine removal of goods Duty not paid on individual clearance - Penalty under Rule 25(a) of of Central Excise Rules 2002 Held that - There is no doubt that the provisions of section 11AC is not attracted - If duties are not so paid the goods are deemed to be non-duty paid as per the Rule and hence such goods become liable to confiscation under Rule 25 of the Rules and assessee becomes liable to penalty under Rule 25 (a) - Following Paras Lubricants Ltd Vs. CCE 2013 (4) TMI 245 - CESTAT MUMBAI - Penalty under Rule 25(a) is applicable - the Tribunal did not agree with imposing heavy penalty -there is some variation in the proportionality of penalty imposed considering the amounts involved and period involved Penalty in the present case reduced Decided partly in favour of Assessee.

Summary

Issues:
1. Penalty imposition under Rule 25(a) of Central Excise Rules, 2002 for non-payment of excise duty on individual clearances.
2. Applicability of Rule 8(3A) regarding duty payment on each consignment during defaulting period.

Issue 1: Penalty Imposition under Rule 25(a)
The case involved two appeals concerning penalty imposition under Rule 25(a) of Central Excise Rules, 2002 for non-payment of excise duty on individual clearances. The appellants, manufacturers of excisable goods, failed to pay excise duty amounting to Rs. 3,58,77,000/- for March 2010 on time. The Revenue initiated penalty proceedings under Rule 25(a) read with section 11AC. The adjudicating authority initially dropped the penalty proposal, but the Commissioner (Appeal) later imposed a penalty of Rs. Ten lakhs. The appellant argued that the delay was due to a financial crunch and that the penalty was disproportionate. The Counsel for Revenue contended that non-payment of duty on each consignment during the defaulting period attracts penalty under Rule 25(a.

Issue 2: Applicability of Rule 8(3A)
The debate centered around the applicability of Rule 8(3A) which mandates duty payment on each consignment during the defaulting period. The Counsel for appellant cited a Gujarat High Court decision limiting penalties under Rule 27 to Rs. 5000 in such cases. However, the Ld AR for Revenue highlighted the change in legal provisions with the introduction of sub-rule (3A) in Rule 8. He argued that the decision in Saurashtra Cements case was based on a different rule wording and did not consider the current requirements. The Tribunal referred to past judgments but emphasized the need to adhere to the current legal framework, where duty payment on each consignment is mandatory during defaulting periods. Consequently, the penalty under Rule 25(a) was deemed applicable, but the Tribunal reduced the penalty amount considering the circumstances.

The Tribunal analyzed the arguments from both sides, considering past judgments and the current legal provisions. While acknowledging the past decisions cited by the appellant, the Tribunal emphasized the importance of aligning with the current legal requirements. Ultimately, the Tribunal upheld the imposition of penalties under Rule 25(a) but reduced the penalty amounts in both cases, considering the specific circumstances and amounts involved. The appeals were allowed partially, with reduced penalties of Rs. 15,000 and Rs. 5,000 imposed for the respective units.