2015 (1) TMI 167 - AT - Central Excise

Penalty under Rule 25 of the Central Excise Rules, 2002 - on four occasions the respondent could not pay duty in time but they on their own paid the duty along with interest for the period they defaulted - Commissioner (Appeals) he dropped, the penalty on the premise that the provisions of Section 11AC of the Central Excise Act, 1944 were not invoked in the facts of the case which is prime condition for imposition of penalty - Held that - Commissioner (Appeals) dropped the penalty on the premise that provisions of Section 11AC of the Act have not been invoked. There is no finding of the lower authorities that the respondent has not paid the duty in time by way of fraud, collusion, misstatement, suppression of fact or contravention of provisions of Act/Rules with an intend to evade payment of duty, to invoke the provisions of Section 11AC of the Act. When these findings are not there, therefore the provisions of Rule 25 cannot be invoked. Further, the case law relied upon by the ld. AR for imposition of penalty under Rule 27 ibid relevant to the facts of this case. As in that case, the lower authorities imposed the penalty under Rule 25 ibid. But in this case, the penalty under Rule 25 ibid is dropped. Further, on perusal of the record, I find that there is no prayer in the appeal to impose penalty under Rule 25 ibid. Therefore, at this stage, the prayer for imposition of penalty under Rule 27 cannot be accepted. - Decided against Revenue.

Summary

Issues: Appeal against dropping of penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
1. The case involved the appeal by the Revenue against the dropping of penalty against the respondent under Rule 25 of the Central Excise Rules, 2002.

2. The respondent had failed to pay duty on four occasions but later paid the duty along with interest voluntarily. A show cause notice was issued for penalty under Rule 25. The penalty was confirmed by the adjudicating authority but dropped by the Commissioner (Appeals) citing the non-invocation of Section 11AC of the Central Excise Act, 1944, a prime condition for penalty imposition.

3. The Revenue argued that the respondent being habitual offenders, penalty under Rule 25 should be imposed. Alternatively, they suggested imposing penalty under Rule 27 based on a decision of the Hon'ble High Court of Gujarat.

4. The Tribunal noted that the Commissioner (Appeals) dropped the penalty due to the absence of findings regarding fraud, collusion, or contravention of provisions to invoke Section 11AC. As such, Rule 25 could not be applied. The case law cited by the Revenue was deemed irrelevant as it pertained to a different scenario where penalty under Rule 25 was imposed.

5. It was observed that there was no prayer in the appeal to impose penalty under Rule 25, thus the request for penalty under Rule 27 could not be accepted. Consequently, the impugned order dropping the penalty was upheld, and the Revenue's appeal was dismissed along with the cross-objection.

6. The Tribunal found no infirmity in the impugned order and upheld the decision to drop the penalty against the respondent under Rule 25 of the Central Excise Rules, 2002.