2012 (5) TMI 542 - AT - Central Excise

Penalty Delay in duty payment Whether penalty imposable under Rule 27 or under Rule 25 of the Central Excise Rules, 2002 - Held that - there is some variation in the proportionality of penalty imposed in the two cases considering the amounts involved and period involved - In this case the defaulted amount is Rs. 27,29,823/- for a period of 12 days. So I reduce the penalty to Rs. 15000 - Decided partly in favour of assessee.

Summary

Issues:
1. Applicability of penalty under Rule 25(a) of Central Excise Rules, 2002 for non-payment of excise duty on individual clearances during a specific period.
2. Interpretation of Rule 8(3A) regarding duty payment on each consignment before clearance.
3. Comparison of relevant case laws to determine the appropriate penalty amount.

Issue 1: Applicability of Penalty under Rule 25(a):
The case involved two appeals concerning the same company but different manufacturing units. The appellants failed to pay excise duty amounting to Rs. 3,58,77,000/- for the month of March 2010 by the due date and continued to clear goods without payment until the amount was paid with interest. The Revenue initiated penalty proceedings under Rule 25(a) of the Central Excise Rules, 2002. The adjudicating authority initially dropped the penalty proposal, citing no intention to evade duty. However, the Commissioner (Appeal) imposed a penalty of Rs. Ten lakhs, leading to the appeal. The appellant argued that the penalty was disproportionate for a minor offense and cited a Gujarat High Court case for a lower penalty limit under Rule 27.

Issue 2: Interpretation of Rule 8(3A):
The Revenue argued that non-payment of duty on each consignment during the defaulting period made the goods liable to confiscation under Rule 25 and the assessee liable for penalty under Rule 25(a). They highlighted the introduction of sub-rule (3A) in Rule 8, requiring duty payment on each consignment during a default period. The appellant cited a different interpretation based on previous rulings, including the Saurashtra Cements case, which did not have the same duty payment requirement during defaults.

Issue 3: Comparison of Case Laws for Penalty Amount:
Both sides presented case laws to support their arguments. The appellant relied on decisions favoring a lower penalty, while the Revenue cited cases upholding penalties under Rule 25(a). The judge considered the change in legal provisions post the Saurashtra Cements case and decided to follow subsequent Tribunal decisions that supported the penalty imposition. The judge reduced the penalty amount in both appeals based on the defaulted amounts and periods involved, aligning with the proportionality principle.

In conclusion, the judge partially allowed both appeals, reducing the penalties imposed by the Commissioner (Appeal) significantly based on the considerations of proportionality and legal interpretations regarding duty payment defaults and penalty applicability under Rule 25(a).