2014 (8) TMI 177 - AT - Central Excise

Imposition of penalties - Violation the provisions of Rule 8 of Central Excise Rules, 2002 - Held that - Appellant-assessee has paid the amount through PLA along with interest. If the said duty liability which has been fastened on him for making payment through PLA is discharged along with interest, the provisions of Rule 8(3) have been more or less complied with - in the case of Kalp Corporation - 2013 (8) TMI 208 - CESTAT AHMEDABAD , this Bench has clearly recorded that if there is a default of payment duty, penalty can be imposed only under Rule 27 of Central Excise Rules, 2002, as has been decided by the Hon ble High Court of Gujarat in the case of CCE Vs Saurashtra Cement Ltd. - 2010 (9) TMI 422 - GUJARAT HIGH COURT . No reason to deviate from such a view already taken. Accordingly, the appeal filed by the appellant-assessee is allowed to the extent it is challenging imposition of penalty under Rule 25 of Central Excise Rules, 2002 and appellant is also liable to be penalized under Rule 27 of Central Excise Rules, 2002 which during the period was maximum ₹ 5,000 - Decided partly in favour of assessee.

Summary

Issues involved: Imposition of penalties for violating Rule 8 of Central Excise Rules, 2002; Appeal against penalty under Rule 25; Appeal by Revenue.

Analysis:
1. The judgment addresses four interconnected appeals concerning penalties for violating Rule 8 of Central Excise Rules, 2002. The appellant-assessee defaulted in payment and utilized CENVAT Credit for Central Excise duty during the default period. Lower authorities held the appellant liable for interest and penalty, but the first appellate authority accepted the appellant's contention of discharging the duty liability.

2. The appellant challenged the penalty imposed under Rule 25 of Central Excise Rules, 2002. The appellant's counsel argued that the show cause notice did not invoke Rule 27 for penalty imposition, requesting the penalty to be set aside. The Departmental Representative contended that the first appellate authority did not verify the appellant's submission of discharging the amount through PLA.

3. The presiding judge found that the appellant had paid the amount through PLA along with interest, essentially complying with Rule 8(3). Referring to the case law of Kalp Corporation and CCE Vs Saurashtra Cement Ltd., the judge ruled that penalties for default in duty payment can only be imposed under Rule 27, not Rule 25. Consequently, the appellant was held liable for penalty under Rule 27, capped at Rs. 5,000 during the relevant period.

4. The judgment also addressed the Revenue's appeal, which was deemed meritless as the appellant had already paid the due amount to the Central Government with interest. Therefore, the Revenue's appeals were rejected. Additionally, the appellant was granted consequential relief due to the partial allowance of their appeal and the pre-deposit requirement for hearing and disposal of the appeal.

5. In conclusion, the judgment clarified the penalty imposition under Rule 27 for default in duty payment, citing relevant case law. It upheld the appellant's appeal against penalties under Rule 25 and dismissed the Revenue's appeals. The decision provided relief to the appellant based on the limited extent to which their appeal was allowed.