2016 (12) TMI 1519 - AT - Central Excise

Imposition of penalty u/r 25 of the Central Excise Rules 2002 - The appellants have defaulted monthly payment of excise duty on due date in respect of the clearance of their final product for more than one month - demand on the ground that during the default period the duty should have been paid on consignment basis and also from PLA and not by utilizing the cenvat credit - Held that - The only lapse on the part of the appellants was they were supposed to pay duty through PLA on consignment basis. In this fact, it cannot be said that the appellants had any intention to evade payment of duty as each and every consignment was undisputedly cleared on the invoices issued under Rule 11 of Central Excise Rules, 2002 - Since the appellants have paid the duty even from cenvat account and the department has accepted the said payment for the reason that the said payment of duty, therefore the only lapse at present is that the appellants have not paid the duty on consignment basis but on monthly basis. For this lapse in my considered view, the penalty under Rule 25(1) (a) cannot be imposed. However there is no doubt that the appellants have contravened the provision inasmuch as they have paid duty on monthly basis as against requirement of payment of duty on consignment basis. Therefore they are liable for penalties but not under Rule 25(1) (a) but under Rule 27 of the Central Excise Rules. As per my above discussion, I reduce the penalties from ₹ 1lakh each to ₹ 5,000/- each. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
Default in monthly payment of excise duty, demand of duty paid during default period, imposition of penalty under Rule 25, demand of interest under Section 11AB, appeal for waiver of penalties, payment of duty on monthly basis instead of consignment basis, invocation of Rule 25 for penalty, intention of evasion of duty, acceptance of payment by the department, applicability of judgments, contravention of provisions, imposition of penalties under Rule 27.

Analysis:
The judgment deals with a case where the appellants defaulted in the monthly payment of excise duty on the due date for more than one month. The issue arose when the department demanded duty paid during the default period on a consignment basis, along with proposing penalties under Rule 25 and interest under Section 11AB. The appellants cleared goods and paid duty from the Cenvat account on a monthly basis, which was accepted by the department. The adjudicating authority confirmed the duty demand, interest, and imposed a penalty under Rule 25. The appellants appealed for waiver of penalties, which was partially allowed by reducing the penalties from an equal amount of duty to ?1 lakh each.

The appellant's counsel argued that there was no intention of evasion of duty as duty was paid on clearances, albeit on a monthly basis instead of a consignment basis. The counsel relied on various judgments to support their argument. On the other hand, the Revenue representative reiterated the findings of the impugned order and stated that penalties were correctly imposed under Rule 25(1)(a) even without mens rea. The Revenue representative cited judgments to support their stance.

After considering both sides' submissions, the Member (Judicial) noted that the appellants had discharged duty on clearances during the default period, albeit on a monthly basis instead of a consignment basis. It was observed that there was no intention to evade duty, as each consignment was cleared on invoices under the Central Excise Rules. The Member highlighted that the penalties imposed under Rule 25(1)(a) were not warranted, but penalties under Rule 27 were justified for contravening the provisions. Consequently, the penalties were reduced from ?1 lakh each to ?5,000 each. The impugned order was modified accordingly, and the appeals were partly allowed in the mentioned terms.