2009 (7) TMI 1000 - AT - Central Excise

Penalty - Rule 25 - the appellant defaulted in payment of duty on fortnightly basis in terms of Rule 8 of CER, 2002, though the clearances were affected under statutory invoices and returns were duly filed by them - Rule 8(3A) - Held that - By delaying payment of duty, an assessee is penalised to the extent of interest required to be paid by him on such delayed payments. The Provisions of Rule 8(3A) relied upon by the SDR are not invocable inasmuch as the same relate to the assessee s liability to pay duty on each consignment at the time of removal without utilising the credit and it is in the event of failure of the above legal obligation that the goods have to be deemed as having been cleared without payment of duty - In the instant case there is no order passed by any authority requiring the assessee to pay duty on consignment basis. As such I find that the above rule may not be strictly applicable to the facts of the present case. Such delayed payments would not attract the provisions of Rule 25 and the same would be covered by Rule 27 which provide for maximum penalty of ₹ 5000/- - penalties reduced to ₹ 5,000/- each - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Default in payment of duty on fortnightly basis post-June 2006, challenge to 100% penalty imposed, applicability of Rule 25 and Rule 27, invocation of Rule 8(3A), interpretation of Section 11AC, reduction of penalties to Rs. 5,000 each.

Analysis:
The case involved a challenge to the imposition of a 100% penalty on the appellant for defaulting in payment of duty on a fortnightly basis post-June 2006. The appellant had paid the duty along with interest but contested the penalty. The advocate cited an earlier order in the same appellant's case, arguing that delayed payments should be covered under Rule 27 with a maximum penalty of Rs. 5,000, not Rule 25. The Departmental Representative (DR) argued that Rule 8(3A) applied to the case, justifying the 100% penalty for duty default beyond 30 days from the due date.

The judge analyzed the submissions and found that penalties were imposed under Rule 25 read with Section 11AC. The judge noted that the appellant's duty liability was never in doubt, as clearances were recorded, returns were filed, and there was no evidence of clandestine removals. The judge determined that the provisions of Rule 8(3A) were not directly applicable to the case since there was no order requiring duty payment on a consignment basis. Citing a previous order in the same appellant's case, the judge reduced the penalty to Rs. 5,000, as there was no fraudulent intent to evade duty payment.

In conclusion, the judge reduced the penalties in both cases to Rs. 5,000 each based on the previous order's rationale. The appeals were disposed of accordingly, and stay petitions were also resolved. The judgment was pronounced on 29-7-2009 by Ms. Archana Wadhwa, J.