2017 (2) TMI 1146 - AT - Central Excise

Imposition of penalty u/r 25 - the appellant has defaulted in payment of duty liability - Held that - the appellant is defaulted in the making the payment of duty in time two times i.e. June 2003 and October, 2003. For the default of June 2003, the appellant paid duty along with interest but for October, 2003, the appellant paid the duty on pointing out by the Department. But no penalty has been imposed on the appellant for the default for the period October, 2003. In this circumstances, the appellant is on better footing for the default of June, 2003 by passing duty along with interest. Further in the show cause notice, there is no allegation against the appellant that they have not paid the duty for the month of June, 2003 by way of fraud, collusion, wilful misstatement, suppression of facts or within an intent to evade payment of duty - penalty set aside - appeal allowed - decided in favor of assessee.

Summary

Issues:
Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 38 A of the Central Excise Act, 1944 for default in duty payment.

Analysis:
The appellant defaulted in paying duty for June 2003 and October 2003. The penalty was imposed for the default in June 2003 but not for October 2003. The appellant argued that penalty cannot be imposed without alleging fraud, collusion, willful misstatement, suppression of facts, or intent to evade duty payment with malafide intention, citing relevant case laws. The appellant contended that since duty was paid along with interest, penalty should not be imposed. The department argued that since the appellant failed to pay duty on time, the penalty was rightly imposed.

The tribunal considered the submissions and reviewed the show cause notice and adjudication order. It was noted that the appellant paid duty along with interest for June 2003 but paid duty for October 2003 only after being pointed out by the department. No penalty was imposed for the October 2003 default. The tribunal observed that there were no allegations of fraud, collusion, willful misstatement, or intent to evade duty payment for June 2003. As per Section 11AC of the Act, the penalty can only be imposed under specific circumstances, which were not present in this case. Citing a relevant decision of the Hon’ble Punjab & Haryana High Court, the tribunal held that the penalty under Rule 25 of the Central Excise Rules, 2002 was not imposable on the appellant. Consequently, the penalty imposed was set aside, and the appeal was allowed with any consequential relief.

Therefore, the tribunal ruled in favor of the appellant, setting aside the penalty imposed for the default in duty payment for June 2003, as the necessary conditions for penalty imposition were not met, and the appellant had paid the duty along with interest.