2009 (8) TMI 223 - HC - Central Excise

Assessee-respondent committed default in payment of duty liability the Adjudicating Authority ordered forfeiture of the liability of payment of duty on monthly basis which was available to the assessee-respondent under Rule 8(1) of the Rules for a period of two months - Commissioner (Appeals) on the ground that the default in discharge of duty was caused due to the fact that the assessee-respondent company was declared as a sick unit by the BIFR and it has been facing grave financial crisis. Commissioner (Appeals) came to the conclusion that the order passed by the Adjudicating Authority was too harsh and reduced the period of forfeiture from two months to three weeks - the assessee-respondent(s) have paid the substantial duty in time and the balance has also been paid with interest. Therefore hardly any loss has been caused to the Revenue. We see no ground to interfere with the order passed by the Tribunal - Commissioner (Appeals) has rightly reduced the period of forfeiture facility Tribunal rightly confirmed the order of Commissioner Revenue s appeal is dismissed

Summary

Issues:
1. Interpretation of statutory provisions under the Central Excise Rules, 2002 by the Tribunal.
2. Modification of penalty period under Rule 8 of the Central Excise Rules, 2002 by the Tribunal.

Issue 1 - Interpretation of statutory provisions:
The case involved a manufacturer of steel pipes & tubes who defaulted in paying duty for July 2005, leading to a show cause notice and subsequent order of forfeiture by the Adjudicating Authority under Rule 8(3A) of the Central Excise Rules, 2002. The Commissioner (Appeals) later reduced the forfeiture period from two months to three weeks considering the financial crisis faced by the company. The Tribunal, in separate cases, reduced forfeiture periods based on judgments from different High Courts, emphasizing that the payment of substantial amount within the due date and subsequent payment with interest justified the reduction. The Tribunal dismissed all appeals by the Revenue, holding that the balance duty had been paid with interest, causing no significant loss to the Revenue.

Issue 2 - Modification of penalty period:
The Tribunal's decisions in various cases highlighted the consideration of financial crisis faced by companies as a factor in modifying forfeiture periods under Rule 8 of the Central Excise Rules, 2002. Different High Court judgments were referenced to support the Tribunal's stance that payment of substantial amounts within the due date, followed by payment of the balance duty with interest, warranted reduction in forfeiture periods. The Tribunal's approach focused on the financial circumstances of the companies involved and the timely payment of dues, leading to the dismissal of all appeals by the Revenue. The Court, after considering the submissions, found no grounds to interfere with the Tribunal's orders, as the substantial duty had been paid in time, and the appeals were subsequently dismissed.

This detailed analysis of the judgment from the Punjab & Haryana High Court emphasizes the interpretation of statutory provisions and the modification of penalty periods under the Central Excise Rules, 2002 by the Tribunal, showcasing a consistent approach based on financial circumstances and timely payment of dues in various cases.