2015 (6) TMI 225 - AT - Central Excise

Imposition of penalty u/s 78 - Lower authority reduced penalty - Held that - Appeal has been filed in the instant case only on 01/04/2013 whereas the order of the appellate authority is dated 21/12/2012. The 30 days time-limit granted by the lower appellate authority would have certainly expired before the appeal was filed. However, the Revenue has not verified whether the appellant has paid the lower amount of penalty or not. If they had done so, there would not be any need to file this appeal itself. Be that as it may, in view of the hon ble Bombay High Court s decision in the case of Castrol India Ltd. (2012 (6) TMI 697 - BOMBAY HIGH COURT), the lower appellate authority could not have extended the time-limit for the appellant to pay the mandatory penalty under Section 78. To this extent the impugned order is incorrect in law and merits to be set aside - Decided in favour of Revenue.

Summary

Issues:
1. Power of lower appellate authority to grant reduction in penalty.
2. Commencement of the 30-day period for payment of penalty.
3. Application of the judgment of the Bombay High Court in a similar case.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise & Customs, Nasik, confirming duty demand and penalty under Section 78 of the Finance Act, 1994. The lower appellate authority had reduced the penalty amount and extended the time for payment, which was challenged by the Revenue.

2. The main contention of the Revenue was that the lower appellate authority exceeded its powers by granting a reduction in penalty after it had been confirmed by the adjudicating authority. The Revenue argued that the 30-day period for payment of penalty should start from the date of receipt of the order-in-original, not the order-in-appeal. The Assistant Commissioner relied on a judgment of the Bombay High Court in a similar case under the Central Excise Act, 1944, where it was held that the liability to pay penalty must be fulfilled within the specified time limit.

3. The Tribunal noted that the appeal was filed after the expiration of the 30-day period granted by the lower appellate authority. However, the Revenue had not verified whether the appellant had paid the reduced penalty amount. Referring to the Bombay High Court's decision in a related case, the Tribunal concluded that the lower appellate authority erred in extending the time for payment of penalty under Section 78. Therefore, the impugned order was set aside, and the appeal filed by the Revenue was allowed.

This judgment highlights the importance of adhering to statutory time limits for the payment of penalties and the limitations on the powers of appellate authorities to modify penalty amounts once confirmed by the adjudicating authority. The application of precedent from higher courts plays a crucial role in interpreting and applying legal provisions in similar cases.