2014 (6) TMI 683 - AT - Central Excise

Failure to deposit the duty electronically - Penalty under Rule 27 ibid for violation of the proviso to Rule 8(1) ibid 19 times - whether for each violation, maximum penalty of Rs. 5,000/- and on this basis total penalty of Rs. 95,000/- should be imposed or whether the penalty of Rs. 10,000/- upheld by the Commissioner (Appeals) is sufficient - Held that - In terms of 3rd Proviso to Rule 8(1), in case of an assessee whose monthly duty payment is Rs. 50 lacs or above, he is required to deposit the duty electronically through internet banking and violation to do so would invite penalty under Rule 27 according to which the contraventions in respect of which no penalty has been prescribed elsewhere, would attract penalty not exceeding Rs. 5,000/-. It is clear that Rs. 5,000/- is the maximum penalty and Adjudicating Authority in its discretion may imposed lower penalty also. Looking to the reasons for the respondent s inability to comply with provisions of 3rd proviso to Rule 27(1), I am of the view that maximum penalty of Rs. 5,000/- under Rule 27 is not called for and as such I am of the view that the penalty imposed by the Adjudicating Authority which has been upheld by CCE (Appeals) is sufficient - Decided against Revenue.

Summary

Issues:
Violation of proviso to Rule 8(1) of Central Excise Rules, 2002 regarding electronic duty payment; Imposition of penalty under Rule 27 for non-compliance; Appeal against penalty enhancement by Revenue.

Analysis:
The case involved an allegation against the respondent for not paying duty electronically through internet banking for 19 months, despite the duty payable exceeding Rs. 50 lacs each month, as required by the proviso to Rule 8(1) of Central Excise Rules, 2002. The Jurisdictional Assistant Commissioner imposed a penalty of Rs. 10,000 under Rule 27 for this violation. The Revenue appealed to the Commissioner (Appeals) seeking an enhanced penalty of Rs. 95,000, i.e., Rs. 5,000 for each month of non-compliance. However, the Commissioner (Appeals) dismissed the appeal, leading the Revenue to file a further appeal.

The respondent did not appear for the hearing, resulting in an ex-parte decision concerning them. The learned Jt. CDR argued for the imposition of Rs. 5,000 penalty for each violation under Rule 27. Upon reviewing the submissions and records, the Member (T) considered whether the penalty should be increased to Rs. 95,000 or remain at Rs. 10,000. The respondent's defense included challenges related to the lack of internet connectivity in a remote area where their Mills Society was situated, as well as the requirement for dual signatories for financial transactions hindering electronic payment compliance.

The Member (T) noted that the maximum penalty under Rule 27 is Rs. 5,000 for contraventions not specified elsewhere, with the Adjudicating Authority having discretion to impose a lower penalty. Considering the reasons for non-compliance provided by the respondent, the Member (T) concluded that the maximum penalty was not warranted. Therefore, the penalty imposed by the Adjudicating Authority and upheld by the Commissioner (Appeals) was deemed sufficient, leading to the dismissal of the Revenue's appeal.