2012 (8) TMI 471 - AT - Central Excise

Penalty u/s 11AC for belated payment of excise duty during the period January, 2009 to March, 2009 - belated filing of returns during period January, 2009 to June, 2009 - assessee pleaded financial crisis - Held that - It is no doubt that the appellant did not pay duty in time, they also did not file the return in time, but when they filed the return and thereafter they made the payment of entire amount of duty along with interest. Therefore, penalty u/s 11AC is dropped but, as the appellant has contravened the provisions of law, they are liable to pay the penalty under Rule 27 of the Central Excise Rules, 2002 - Appeal is partly allowed with consequential relief.

Summary

Issues:
- Failure to pay excise duty due to financial crisis
- Belated filing of returns and payment of duty with interest
- Imposition of penalty under Section 11AC of the Central Excise Act, 1944
- Applicability of penalty under Rule 27 of the Central Excise Rules, 2002

Analysis:
1. Failure to pay excise duty due to financial crisis:
The appellants, as central excise assesses, failed to pay the excise duty during a financial crisis from January 2009 to March 2009. The return for this period was filed belatedly in June 2009, along with the payment of duty and interest. This failure led to the issuance of a show cause notice for appropriation of the unpaid duty and imposition of penalty under Section 11AC of the Central Excise Act, 1944, read with Rule 25 of the Central Excise Rules, 2002.

2. Belated filing of returns and payment of duty with interest:
The appellants contended that despite the delay in paying the duty, they eventually cleared the dues along with interest. They argued that the show cause notice was unwarranted as there was no intent to evade payment. The appellants cited a Tribunal decision to support their claim that the penalty under Section 11AC was not justified due to the absence of fraud or willful misstatements.

3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944:
The Departmental Representative opposed the appellants' argument, asserting that the delayed payment necessitated the imposition of a penalty under Section 11AC. However, the Tribunal, after considering both sides, held that while there was a delay in payment and filing of returns, the penalty under Section 11AC was not warranted in this case. Instead, the appellants were found liable to pay a penalty under Rule 27 of the Central Excise Rules, 2002.

4. Applicability of penalty under Rule 27 of the Central Excise Rules, 2002:
The Tribunal ruled that although the appellants contravened the law by not paying the duty on time, the penalty under Rule 27 was appropriate in this situation. Consequently, a penalty of Rs. 5,000 was imposed under Rule 27, which was to be adjusted against the previously paid penalty and excess interest amount. The appeal was partly allowed with consequential relief, providing clarity on the imposition of penalties based on the specific circumstances of the case.