2012 (9) TMI 862 - AT - Central Excise

Qauntification of penalty - Enhancement of penalty - Held that - Revenue in their memo of appeal advanced no reasonable ground to enhance the penalty of Rs. 5,000/- per transaction. There is no such provision of imposition of penalty either on transaction-wise or on manufacture-wise basis - Decided against Revenue.

Summary

Issues:
Violation of Central Excise Rules - Imposition of penalty under Rule 27 for non-deposit of duty through electronic payment.

Analysis:
The case involved a dispute regarding the imposition of a penalty on the respondents for not depositing the duty via electronic payment as required by the Central Excise Rules. The respondents had instead deposited the duty from their Personal Ledger Account (PLA), leading to the initiation of proceedings resulting in a penalty of Rs. 5,000/- under Rule 27 of the Central Excise Rules, 2002. The Asstt. Commissioner's order imposing the penalty was challenged by the Revenue, leading to an appeal before the Commissioner (Appeals).

The Commissioner (Appeals) rejected the Revenue's appeal, noting that Rule 27 provides for a maximum penalty of Rs. 5,000/- and that the Revenue's argument for imposing Rs. 5,000/- for each breach of law was incorrect. The Commissioner emphasized that penal action for a breach of the rule should be more deterrent than punitive, especially in cases where the breach is procedural and not resulting in any revenue loss. The Commissioner justified the penalty of Rs. 5,000/- considering the recurring nature of the procedural lapse due to delayed responses from the bank regarding e-payment facilities.

The Revenue, in their appeal memo, failed to provide any reasonable grounds to support an increase in the penalty beyond Rs. 5,000/- per transaction. It was highlighted that there is no provision for imposing penalties on a transaction-wise or manufacture-wise basis under the relevant rules. Consequently, the Revenue's appeals were rejected, affirming the penalty of Rs. 5,000/- per instance as imposed by the Asstt. Commissioner.

In conclusion, the appellate tribunal upheld the penalty of Rs. 5,000/- on the respondents for contravening the Central Excise Rules by not depositing the duty through electronic payment, emphasizing the procedural nature of the lapse and the absence of provisions for escalating penalties based on transaction or manufacturing quantities.