2012 (12) TMI 643 - AT - Service Tax

Delay in duty payment - penalty under Rule 27 or Rule 25 - seeking Waiver of penalty u/s 11AC Held that - As no intention on the part of the respondent assessee to evade any payment of duty and as soon as liquidity was available, duty was paid along with interest, thus following the decision in case of COMMISSIONER OF C. EX. & CUSTOMS Versus SAURASHTRA CEMENT LTD. 2010 (9) TMI 422 - GUJARAT HIGH COURT penalty could not be levied under Rule 25 of the Rules and for the alleged default, the penalty was restricted to Rs. 5,000/- under Rule 27 of the Rules.

Summary

Issues:
- Appeal for waiver of penalty under Section 11AC read with Rule 25 of Central Excise Rules, 2002 of Rs.25,000/- confirmed by lower authorities.

Analysis:
In this case, the appellants, who are manufacturers of excisable goods, filed monthly returns for March 2010 after the due date and defaulted on payment of Rs.88,028/- which was paid later along with interest. Subsequently, they opted for filing quarterly returns for the year 2010-11 as an SSI unit but failed to pay duty within 30 days from the due date. As a result, a penalty of Rs.25,000/- was imposed under Rule 25 of the Central Excise Rules, 2002, along with an additional penalty of Rs.5000/- under Rule 27 of the same rules. The appellant challenged the penalty imposed under Rule 25 before the Appellate Tribunal CESTAT, CHENNAI.

Upon hearing both sides, the Tribunal considered the submissions and referred to a case law involving Solar Chemferts Pvt. Ltd. CCE Thane. The Tribunal noted that Rule 8(3A) prescribes consequences such as confiscation of goods and penalties under Rule 25, Rule 26, or Rule 27. Citing a decision by the Gujarat High Court in the case of CCE v. Saurashtra Cement Ltd., it was established that penalty under Rule 27 only can be imposed in such circumstances. Therefore, the Tribunal decided to waive the penalty under Rule 25 but confirmed the penalty imposed under Rule 27 of the Central Excise Rules, 2002. The appeal was disposed of accordingly, following the precedent set by the Gujarat High Court.

This judgment highlights the importance of adhering to excise rules and timely payment of duties to avoid penalties. It also emphasizes the significance of legal precedents in determining the appropriate penalties applicable in specific situations. The decision showcases the Tribunal's commitment to upholding legal principles and ensuring fair enforcement of excise regulations.