2009 (9) TMI 541 - AT - Central Excise

Penalty- The appellants paid duty along with interest for February 2007 on 20-4-07 and paid duty and interest for March 2007 on 17-5-07. The relevant rule requires the payment of duty for February by 5th March and payment of duty for March by 31st March. Held that- there is contravention of Rule 8(3A) of the Central Excise Rules, 2002. However, there is no evidence of any fraud etc. in this case and hence the provisions of Rule 11AC are not attracted. Accordingly, the penalties imposed are reduced to Rs. 5,000/- in the first case and Rs. 4,000/- in the second case.

Summary

Issues:
1. Contest of penalties imposed.
2. Payment of duty and interest for February and March 2007.
3. Contravention of Rule 8(3A) of the Central Excise Rules, 2002.
4. Applicability of Rule 11AC and Rule 25.
5. Imposition of penalties and their reduction.

Analysis:

1. The first issue revolves around the contest of penalties imposed. The appellant's counsel clarified that the contest is limited to the penalties amounting to Rs. 48,803/- and Rs. 39,653/- in two cases, while the demand of duty was not contested at the lower appellate authority or before the Tribunal. This distinction is crucial in determining the scope of the appeal and the specific focus on penalties.

2. Moving on to the second issue, it concerns the payment of duty and interest for February and March 2007. The appellants paid duty along with interest for February 2007 on 20-4-07 and for March 2007 on 17-5-07. However, the payment deadlines specified by the relevant rule were not met, leading to a contravention of Rule 8(3A) of the Central Excise Rules, 2002, which required duty payment by specific dates.

3. The third issue delves into the contravention of Rule 8(3A) of the Central Excise Rules, 2002. The clearances made by the appellants from April 1, 2007, to April 19, 2007, and from May 1, 2007, to May 16, 2007, occurred without the duty being paid in cash as mandated by the rule. While no evidence of fraud was found, the contravention of the rule triggered the applicability of Rule 25, which addresses such violations.

4. Issue four pertains to the applicability of Rule 11AC and Rule 25. In this case, Rule 11AC, which deals with penalties in cases of fraud, was deemed inapplicable due to the absence of fraud. However, Rule 25, which addresses contraventions of rules, was found to be squarely applicable given the nature of the violation.

5. Lastly, the fifth issue involves the imposition and subsequent reduction of penalties. Despite the contravention of Rule 8(3A), the penalties imposed were reduced from the original amounts to Rs. 5,000/- and Rs. 4,000/- in the two cases, respectively. This reduction was justified based on factors such as the timely payment of duty and interest within a short period, leading to a more lenient penalty imposition.

In conclusion, the judgment addressed various issues related to penalties, duty payment, contravention of rules, and the appropriate imposition of penalties, ultimately resulting in the reduction of penalties in the appellant's favor.