2014 (3) TMI 7 - AT - Central Excise

Default in making Central Excise duty payment - Penalty under Rule 25 of the Central Excise Rules, 2002 - Default under Rule 8 - Held that - there was no intention on the part of the respondent assessee to evade any payment of duty. It is only because of stringent financial condition, that the duty could not be paid in time and as soon as liquidity was available, duty was paid along with interest. The Tribunal has, therefore, rightly come to the conclusion that penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to Rs. 5,000/- in each matter under Rule 27 of the Rules - Following decision of Commissioner of Central Excise and Customs Vs. Saurashtra Cement Ltd. 2010 (9) TMI 422 - GUJARAT HIGH COURT and Siyaram Packaging Pvt. Ltd. Vs. CCE, Daman 2013 (4) TMI 382 - CESTAT AHMEDABAD - Decided partly in favour of assessee.

Summary

Issues:
Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 for default in making Central Excise duty payment.

Analysis:
The appellant filed an appeal against the imposition of a penalty of Rs.5,00,000 under Rule 25 of the Central Excise Rules, 2002 for default in Central Excise duty payment. The appellant argued that based on various case laws, no penalty under Rule 25 could be imposed. The revenue, represented by Shri J. Nair, relied on the case law of Welldone Celloplast Ltd. Vs. CCE, Delhi IV and contended that the penalty was correctly imposed. The issue revolved around penalties for default in payment of Central Excise duty under Rule 8 of the Central Excise Rules, 2002.

The High Court had previously ruled on a similar issue in the case of Commissioner of Central Excise and Customs Vs. Saurashtra Cement Ltd. The Court held that the penalty under Rule 25 could not be levied if there was no intention to evade payment of duty, and the delay was due to financial constraints. The Court emphasized that the provisions of Section 11AC of the Central Excise Act must be considered while determining the question of levying penalties under Rule 25. The Court confirmed that penalties were rightly restricted to Rs. 5,000 under Rule 27 in cases where there was no intent to evade payment.

The appellant's reliance on another case law was noted, but the judgment of the High Court in the Saurashtra Cement Ltd. case prevailed. The Tribunal held that based on the law laid down by the jurisdictional High Court, a penalty up to Rs. 5,000 was the maximum imposable under Rule 27 of the Central Excise Rules, 2002. Consequently, the appeal was allowed only to the extent of restricting the penalty to Rs. 5,000, in line with the legal precedents established.

In conclusion, the judgment clarified the application of penalties under Rule 25 of the Central Excise Rules, emphasizing the importance of intent to evade payment and financial circumstances in determining the appropriate penalty amount. The decision was based on established case laws and legal principles, ensuring consistency in penalty imposition for defaults in Central Excise duty payments.