2007 (10) TMI 178 - AT - Central Excise

Penalty non maintenance of proper records shortage of the finished goods - respondent is liable to penalty under Rule 25 - Rule 25 transpires that the manufacturer shall be liable to penalty not exceeding the duty on the excisable goods or Rs. 10,000/- whichever is greater since duty amount involved is Rs. 4917 only - order of the Comm. (Appeals) of reduction of penalty less than Rs. 10,000/- i.e. Rs. 4,000/- is set aside

Summary

Issues: Reduction of penalty under Rule 25 of the Central Excise Rules, 2002 by the Commissioner (Appeals)

In this case, the Revenue appealed against the Order-in-Appeal reducing the penalty imposed on the respondent under Rule 25 of the Central Excise Rules, 2002. The facts revealed a shortage of finished goods involving duty, leading to the imposition of a penalty of Rs. 10,000/- by the adjudicating authority. The Commissioner (Appeals) upheld the duty demand but reduced the penalty to Rs. 4,000/-. The Revenue contended that the penalty should not have been reduced below Rs. 10,000/- as per Rule 25. The Tribunal analyzed the provisions of Rule 25 and cited precedents to establish that the minimum penalty under the rule should be Rs. 10,000/-. The Tribunal emphasized that the penalty amount should not be less than the duty amount or Rs. 10,000/-, whichever is greater. Relying on previous judgments, the Tribunal concluded that the Commissioner's reduction of the penalty to Rs. 4,000/- was unsustainable. Consequently, the Tribunal set aside the Commissioner's order and restored the penalty of Rs. 10,000/- imposed by the adjudicating authority, allowing the Revenue's appeal.

This judgment primarily revolved around the interpretation and application of Rule 25 of the Central Excise Rules, 2002 concerning the imposition of penalties for contraventions related to excisable goods. The key issue was the reduction of the penalty amount by the Commissioner (Appeals) below the minimum prescribed limit of Rs. 10,000/-. The Tribunal clarified that Rule 25 mandates a penalty not less than the duty amount or Rs. 10,000/-, whichever is greater, for contraventions. The Tribunal's analysis focused on ensuring consistency in penalty imposition and adhering to the statutory requirements outlined in Rule 25. By referencing relevant case laws, the Tribunal reinforced the principle that penalties should align with the statutory provisions and not fall below the prescribed minimum threshold. The judgment underscored the importance of upholding the minimum penalty requirements specified in Rule 25 to maintain the integrity of penalty impositions in excise matters and deter non-compliance effectively.