2015 (11) TMI 1410 - AT - Central Excise

Imposition of penalty - contravention of the provisions of Rule 8(3) of the Central Excise Rules, 2002 by not paying the duty by due date as specified under Rule 8(1) of the Central Excise Rules, 2002 - whether the default committed by the respondent under Rule 8 warrants penalty under Rule 25 as held by the Additional Commissioner, or Rule 27 as held by the Commissioner (Appeals) - Held that - In view of the law cited by the learned Commissioner (Appeals) in his order, I am of the considered opinion that the default committed by the appellant is not such so as to attract penalty under Section 11AC and Rule 25 of the Central Excise Rules, 2002. Further, the penalty imposed on the respondent under Rule 25 is perfectly in accordance with law and I uphold the decision of the Commissioner (Appeals) - Decided against Revenue.

Summary

Issues:
Reduction of penalty under Rule 25 to Rule 27 for delayed payment of duty.

Analysis:
1. The appeal challenged the reduction of penalty on the respondent from Rs. 1,00,000 under Rule 25 of the Central Excise Rules, 2002 to Rs. 5,000 under Rule 27 by the Commissioner (Appeals).

2. The respondent, a transformer manufacturer, failed to pay duty by the due date as per Rule 8(1) of the Central Excise Rules, 2002. A show cause notice was issued for recovery of duty paid through cenvat credit and imposing a penalty under Rule 25.

3. The Additional Commissioner confirmed the duty demand, interest, and imposed a penalty of Rs. 1,00,000 under Rule 25. The Commissioner (Appeals) upheld the order but reduced the penalty to Rs. 5,000.

4. The learned AR for the appellant argued against the reduction, stating that default in payment of duty should not be equated with evasion of duty under Rule 25.

5. The Commissioner (Appeals) referenced case laws to support the reduction of penalty under Rule 27 for delayed payments due to financial crises, citing examples like Condor Power Products Pvt. Ltd. and Ganpati Alloys cases.

6. The Commissioner (Appeals) held that the default did not warrant penalty under Rule 25, as per the law established in various cases like Praveen Foundry case, where penalty was imposed under Rule 27 for delayed payment.

7. The appellate tribunal upheld the decision of the Commissioner (Appeals) and dismissed the appeal of the Revenue, stating that the default did not merit penalty under Rule 25, and the penalty under Rule 27 was appropriate in this case.