2016 (12) TMI 1515 - AT - Central Excise

Imposition of penalty - belated payment of duty - Rule 8(3) of the Central Excise Rules 2002 - whether the respondent is liable to pay penalty under Rule 25 of the Central Excise Rules 2002 for non-payment/delayed payment of interest under Rule 8(3) of the Central Excise Rules 2002? - Held that - Rule 25 stipulates penalty subject to provisions of Section 11AC Central Excise Act 1944. In other words for imposing penalty under Rule 25 the short payment must be due to the reasons of fraud collusion or any willful mis-statement or suppression of facts with an intent to evade payment of duty. As no allegations with respect to suppression of facts are made in the show-cause notice issued to the respondents penalty under Rule 25 cannot be imposed in this case - appeal rejected - decided against Revenue.

Summary

Issues:
1. Liability for interest under Central Excise Rules.
2. Imposition of penalty under Rule 25 of the Central Excise Rules.

Analysis:
1. The appeal was filed by the Revenue against the rejection of their appeal by the Commissioner (Appeals) regarding the payment of interest on belated duty. The respondent, engaged in electroplating, raised supplementary bills due to price revision and paid differential duty without interest. A show-cause notice was issued for interest and penalty under Rule 25. The adjudicating authority confirmed interest but did not impose a penalty. The Revenue appealed against the penalty decision. The Commissioner rejected the appeal, stating no malafide intention for non-payment of interest. The Revenue challenged this decision.

2. The main issue was whether the respondent was liable for a penalty under Rule 25 for non-payment/delayed payment of interest. Rule 25 allows penalties for contraventions leading to duty evasion. The Commissioner noted that for imposing a penalty under Rule 25, there must be fraud, collusion, willful misstatement, or suppression of facts to evade duty. As no allegations of suppression were made in the show-cause notice, the penalty could not be imposed. The Tribunal upheld the Commissioner's decision, finding no merit in the Revenue's appeal, and dismissed it.

This judgment clarifies the conditions under which penalties can be imposed under Rule 25 of the Central Excise Rules, emphasizing the need for intentional evasion or suppression of facts to justify penalties.