2013 (9) TMI 455 - AT - Central Excise

Interpretation of Provisions - The issue involved in the case was regarding the Interpretation of provisions of Rule 8 and more specifically Rule 8(3A) of Central Excise Rules. 2002 - Held that - Assesse relied upon M/s MEENAKSHI ASSOCIATES Versus COMMISSIONER OF CENTRAL EXCISE, NOIDA 2012 (6) TMI 275 - CESTAT, NEW DELHI while the Revenue relied upon GODREJ HERSHEY LTD. Versus COMMISSIONER OF C. EX., BHOPAL 2010 (11) TMI 263 - CESTAT, NEW DELHI - any omission or failure to comply with the obligation relating to payment of duty in the manner prescribed and within the period specified under Rule 8(1) of the said Rules would amount to default in payment of duty. It may be a short payment of duty or it may be total failure to pay the duty. There seems to be a narrow contradiction in the judgements of the coordinate benches in the case of Godrej Hershey Ltd. and Meenakshi Associates. The said contradiction needs to be settled by the Larger Bench and the said contradiction is (i) whether a default by an assessee has to be considered as an entire default if he does not make part payment of the duty liability in a particular month, (ii) whether penalty can be imposed under Rule 25 or Rule 27. - matter referred to larger bench.

Summary

Issues Involved:
Interpretation of provisions of Rule 8 and Rule 8(3A) of Central Excise Rules, 2002; Contradiction in judgments regarding default in payment of duty and imposition of penalty under Rule 25 or Rule 27.

Analysis:

Issue 1 - Interpretation of Rule 8(3A):
The main issue in this case revolves around the interpretation of Rule 8 and more specifically Rule 8(3A) of the Central Excise Rules, 2002. The appellant argues that Rule 3A applies when the entire duty liability is defaulted, while the respondent contends that even partial default in duty payment should be considered as a default under Rule 8(3A). The appellant relies on a previous Tribunal judgment in the case of Meenakshi Associates, while the respondent cites the Godrej Hershey Ltd. case. The Tribunal finds a contradiction between these judgments and decides to refer the matter to a Larger Bench to resolve the issue.

Issue 2 - Imposition of Penalty under Rule 25 or Rule 27:
The Tribunal also addresses the question of penalty imposition under Rule 25 or Rule 27. The appellant in the Meenakshi Associates case argues that penalty under Rule 27 is appropriate, while the respondent in the Godrej Hershey Ltd. case presents a different perspective. The Tribunal refers to the decision of the Gujarat High Court in the case of CCE Vs. Saurashtra Cement Ltd. and reduces the penalty on the appellant to Rs.5,000. The Tribunal highlights the need to clarify whether penalty should be imposed under Rule 25 or Rule 27, further emphasizing the need for resolution by a Larger Bench.

In conclusion, the Tribunal identifies the contradiction in the interpretations of default in payment of duty and the imposition of penalties under different rules in the cases of Meenakshi Associates and Godrej Hershey Ltd. The Tribunal decides to refer the matter to a Larger Bench for resolution. The judgment underscores the importance of clarity in interpreting legal provisions and the need for consistency in judicial decisions to ensure fair and just outcomes in matters of excise duty liabilities and penalties.