2012 (11) TMI 1011 - AT - Central Excise

Penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 - contravention of Rule 8(3) and 8(3A) of the Central Excise Rules, 2002 - Held that - under Rule 8(3A), the question of imposition of penalty would arise only if clearances of goods have been made after the due date for payment of duty including the 30 days grace period is over. In the instant case, there is no finding in the order of the lower authorities that the appellant had cleared any goods on 1st and 2nd May, 2011. In the absence of such a finding, the question of imposing any penalty on the outstanding amount of duty as on 31-3-2011 does not arise at all. Therefore, the impugned orders are liable to be set aside. However, the matter is remanded back to the original adjudicating authority to verify the claim of the appellant that they had not effected any clearances on 1st & 2nd May. On verification, if the same is found correct, then the appellant would not be liable to any penalty - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 for contravention of Rule 8(3) and 8(3A) of the Central Excise Rules, 2002.

Analysis:
The judgment revolves around the imposition of a penalty on an appellant, a small scale unit engaged in the manufacture of wood and steel furniture, for not discharging the full duty liability on time. The appellant discharged a partial duty liability for the quarter ending 31-3-2011 and paid the balance along with interest after the due date. A penalty was imposed on the appellant under Rule 25 of the Central Excise Rules, 2002. The appellant contended that the penalty imposition was incorrect as per Rule 8(3A) of the Central Excise Rules, which states that penalty arises only if goods are cleared without payment of duty after the due date. The appellant argued that since no goods were cleared after the due date, the penalty was unjustified. The appellant's appeal was dismissed initially, leading to the current appeal before the tribunal.

The tribunal analyzed the provisions of Rule 8(3A) and agreed with the appellant's argument. It was observed that penalty under Rule 8(3A) is applicable only if goods are cleared after the due date for payment of duty. Since there was no evidence of goods being cleared after the due date in this case, the tribunal found the penalty imposition unsustainable in law. The tribunal noted that the lower authorities did not establish that goods were cleared after the due date and, therefore, set aside the impugned orders. The matter was remanded back to the original adjudicating authority to verify if any goods were cleared after the due date. If the appellant's claim of no clearances on 1st & 2nd May is verified, then the appellant would not be liable for any penalty. The appeal and stay application were disposed of accordingly, emphasizing the importance of verifying the factual aspects before imposing penalties under the relevant rules.

This judgment highlights the significance of strict adherence to legal provisions while imposing penalties under excise rules. It underscores the need for authorities to establish clear evidence of non-compliance before penalizing entities, ensuring a fair and just application of the law in excise duty matters.