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2007 (4) TMI 265 - HC - Central ExcisePenalty imposed under Rule 25 of the Central Excise Rules, 2002 ('the Rules') - default in paying the duty - unit being registered with BIFR - HELD THAT - In the present case, there is a finding of the Tribunal that the circumstances were beyond the control of the respondent-company as the matter was pending before BIFR, and as such, the amounts could not be deposited by the respondent-company within time and as soon as it was in a position to make the payment, the respondent-company made the payment not only of the duty, but also of the interest calculated under Rule 8(3) of the Rules. Therefore, we have no doubt in our mind that the Tribunal has correctly interpreted Rule 25 of the Rules and the penalty could not be imposed on the respondent-company. Appeal is dismissed.
Issues:
1. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 for default in paying duty. 2. Interpretation of Section 11AC of the Central Excise Act, 1944 regarding penalties for short-levy or non-levy of duty. 3. Analysis of Rule 25(d) of the Rules in relation to imposition of penalties for contravention with intent to evade payment of duty. 4. Consideration of intention to evade payment of duty as a prerequisite for imposing penalties. Issue 1: Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 for default in paying duty: The respondent-company, a cement manufacturer, faced penalty under Rule 25 for default in paying duty due to being registered with BIFR. Despite timely payment of duty with interest, a penalty was imposed and upheld by the Commissioner of Central Excise. However, the Tribunal reversed the decision, citing circumstances beyond the company's control due to BIFR proceedings. The Tribunal found no intention to evade payment, leading to the conclusion that the penalty could not be imposed. Issue 2: Interpretation of Section 11AC of the Central Excise Act, 1944 regarding penalties for short-levy or non-levy of duty: Section 11AC of the Act outlines penalties for non-levy or short-levy of duty due to fraud, collusion, willful misstatement, or contravention of Act provisions to evade payment. The provision allows for reduced penalties if duty and interest are paid within thirty days. The judgment emphasizes the importance of proving intent to evade payment before imposing penalties under this section. Issue 3: Analysis of Rule 25(d) of the Rules in relation to imposition of penalties for contravention with intent to evade payment of duty: Rule 25(d) states that penalties are applicable if a producer contravenes rules with intent to evade duty payment. The judgment clarifies that mere evasion is insufficient; there must be a clear intention to evade payment for penalties to be justified. The Tribunal's decision in this case aligns with this interpretation, emphasizing the necessity of proving intent for penalty imposition. Issue 4: Consideration of intention to evade payment of duty as a prerequisite for imposing penalties: The judgment highlights the importance of establishing intent to evade payment before imposing penalties. Citing precedents from the Punjab and Haryana High Court and the Allahabad High Court, the judgment reiterates that the presence of an element of evasion is crucial for penalty imposition. In this case, the Tribunal's finding that the company's delay was due to circumstances beyond its control supports the dismissal of the appeal and reinforces the requirement of proving intent for penalty imposition. In conclusion, the High Court of Andhra Pradesh dismissed the appeal, emphasizing the need to establish intent to evade payment before imposing penalties under the Central Excise Act and Rules. The judgment underscores the significance of considering circumstances beyond a company's control and aligning penalty imposition with clear evidence of intent to evade duty payment.
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