2017 (4) TMI 938 - AT - Central Excise

Penalty - whether simultaneous penalty u/r 25 of CER, 2002 and Section 11AC of the CEA, 1944, can be imposed? - Held that - from the very language of the Rule, it is evident that the scheme of the Act read with the Rules, does not provide for two separate penalties, one u/s 11AC of the CEA, 1944 and another u/r 25 of the CER, 2002 - appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether simultaneous penalty under Rule 25 of Central Excise Rules, 2002 and Section 11AC of the Central Excise Act, 1944 can be imposed.

Analysis:

1. Issue of Simultaneous Penalty: The central issue in this appeal was whether the imposition of penalties under both Rule 25 of the Central Excise Rules, 2002, and Section 11AC of the Central Excise Act, 1944 is legally permissible. The Tribunal examined the contention that penalties cannot be imposed independently under these provisions. The Tribunal referred to previous rulings to support its decision. It cited the case of Commissioner of Central Excise, Indore Versus Gahoi Foods Private Ltd., where it was held that non-apportionment of penalties under both Section 11AC of the Act and Rule 25 of the rules could not be the basis for setting aside penalties entirely. Additionally, the case of Sanden Vikas India Ltd. Versus Commissioner of Central Excise, Delhi -IV was referenced, which upheld the penalty under Section 11AC of the Act. The Tribunal emphasized that once suppression of facts to evade duty is established, a penalty under Rule 25 of the Central Excise Rules, 2002, can be imposed, not exceeding the duty on the excisable goods or ?10,000, whichever is greater.

2. Rule 25 of Central Excise Rules, 2002: The Tribunal analyzed the language of Rule 25 of the Central Excise Rules, 2002, to determine the scope of penalties under this provision. It noted that the rule specifies various contraventions that could lead to penalties, including removal of excisable goods, failure to account for goods, engaging in manufacturing without registration, or contravening any provisions with intent to evade duty. The rule outlines that in such cases, goods may be liable to confiscation, and a penalty not exceeding the duty on the excisable goods can be imposed. The Tribunal highlighted that for penalties under this rule, elements of fraud, suppression of facts, or misrepresentation as mentioned in Section 11AC of the Central Excise Act, 1944, must be present to attract penalties under Rule 25.

3. Conclusion: After considering the arguments presented by both parties and examining the provisions of Rule 25 of the Central Excise Rules, 2002, in conjunction with Section 11AC of the Central Excise Act, 1944, the Tribunal concluded that the Act and Rules do not provide for separate penalties under these provisions. The Tribunal emphasized that penalties under Rule 25 require the presence of specific elements mentioned in Section 11AC, indicating that only one penalty can be imposed based on the circumstances. Consequently, the Tribunal dismissed the appeal by Revenue, ruling that simultaneous penalties under Rule 25 and Section 11AC cannot be imposed, as the Act and Rules do not support such dual penalties. The Cross Objection was also disposed of accordingly.