2009 (6) TMI 493 - AT - Central Excise

Penalty- There was a delay in paying the duty for the month of October 2006 only of 10 days and that too on account that the appellants had no knowledge about the bouncing of the cheque as the appellants were busy in attending the family member who was permanently ill during the said period besides being the fact that the amount of duty remained to be paid for 10 days was only Rs.7, 938/- which was debited from PLA. Being so according to the appellants there was no justification for the Commissioner (Appeals) to interfere with the order passed by the original authority. The appellants challenge the order passed by the Commissioner (Appeals) Mumbai. The interference by the Commissioner (Appeals) was in relation to the dropping of the demand of Rs.20, 75, 184/- and education cess of Rs.41, 504/- and failure to order confiscation of the goods on the ground of the same was not available physically for confiscation. The Commissioner (Appeals) has held that the adjudicating authority should have imposed fine in lieu of confiscation. Held that- The intention of the Legislature being very clear from Rule 8 (3A) that in case of failure on the part of the assessee to pay the duty within the specified period and further within the grace period certain consequences have to follow the appellants cannot escape the liability thereunder. For the reasons stated above therefore we do not find any case having been made out for interference with the impugned order. Hence the appeal fails and is accordingly dismissed.

Issues involved:
Challenge to Commissioner (Appeals) order, imposition of penalty under Rule 25 of Central Excise Rules, interference with dropping demand, failure to order confiscation, delay in duty payment, bouncing of cheque, intention to evade duty, Rule 8 of Central Excise Rules, penalty for failure to clear dues, consequences of default in payment, mandatory nature of provisions, grace period for clearing balance amount, consequences of failure to pay duty within specified period.

Detailed Analysis:

1. Challenge to Commissioner (Appeals) Order:
The appellants challenged the order passed by the Commissioner (Appeals) which allowed the department's appeal and set aside the order of the original authority dropping the demand for Rs.20,75,184/- along with education cess of Rs.41,504/- while imposing a penalty of Rs.25,000 under Rule 25 of the Central Excise Rules, 2002. The interference by the Commissioner (Appeals) was regarding the dropping of the demand and failure to order confiscation of goods. The Commissioner (Appeals) held that the adjudicating authority should have imposed a fine in lieu of confiscation.

2. Delay in Duty Payment and Bouncing of Cheque:
The appellants argued that there was a delay of only 10 days in paying the duty for October 2006 due to the bouncing of a cheque, which they were unaware of as they were attending to a permanently ill family member. They contended that there was no intention to evade duty or contravene Rule 8 of the Central Excise Rules, as the amount remaining unpaid was only Rs.7,938, which was paid promptly upon realization of the bounced cheque.

3. Interpretation of Rule 8 of Central Excise Rules:
The appellants' advocate referred to Rule 8 (1) and (4) of the Central Excise Rules, 2002, arguing that there was no justification for penalizing the appellants as they had promptly paid the balance amount due, along with interest, once they became aware of the bounced cheque. The rule mandates the payment of duty by a specified date, and the appellants complied within the stipulated time frame.

4. Penalty for Failure to Clear Dues:
The contention arose regarding the penalty for failing to clear the dues by the due date, as per Rule 8. Sub-rule 3(A) of Rule 8 provides for consequences if the duty is not paid beyond 30 days from the due date. The rule mandates the payment of excise duty for each consignment at the time of removal if the outstanding amount is not cleared within the grace period, leading to penalties and consequences as provided in the rules.

5. Mandatory Nature of Provisions and Consequences of Default:
The Tribunal emphasized the mandatory nature of Rule 8 (3A), stating that consequences must follow if the duty is not paid within the specified period and grace period. The provision is clear that certain consequences must be faced by the assessee for non-compliance, and the Tribunal cannot dilute or exercise discretion contrary to the statutory provision.

6. Decision and Dismissal of Appeal:
The Tribunal concluded that the appellants could not escape liability under Rule 8 (3A) for failing to pay duty within the specified period and grace period. The legislative intent was clear that consequences must follow for such default, and hence, the appeal was dismissed for lack of grounds for interference with the impugned order.

This detailed analysis covers all the issues involved in the legal judgment delivered by the Appellate Tribunal CESTAT, Mumbai, providing a comprehensive understanding of the arguments presented and the Tribunal's decision.

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