2017 (8) TMI 992 - AT - Central Excise

Penalty - Held that - sub-rule (3A) was inserted in Rule 8 vide Notification No. 17/2005-C.E. (N.T.), dated 31-3-2005 which is effective from 1-4-2005, whereunder the provision for forfeiture of monthly payment of duty was provided. I find that the Asstt. Commissioner has passed order for forfeiture of the monthly facility to pay duty on monthly instalment invoking sub-rule (3A) of Rule 8 of Central Excise Rules, 2002. Since sub-rule (3A) inserted and become effective from 1-4-2005, no action could have been taken for period prior to 1-4-2005 under sub-rule (3A) of Rule 8 therefore the order for the forfeiture of facility passed by the Asstt. Commissioner is ab initio illegal and without authority of law - Appeal allowed - decided in favor of the assessee.

Summary

Issues involved:
Whether the appellant is liable for penal action under sub-rule (3A) of Rule 8 of Central Excise Rules, 2002 for default of duty on a monthly payment basis.

Detailed Analysis:

1. Issue of Liability for Penal Action:
The primary issue in this case revolved around determining the liability of the appellant for penal action under sub-rule (3A) of Rule 8 of Central Excise Rules, 2002 due to a default in duty payments for the months of January to March 2005. The adjudicating authority had forfeited the appellant's facility to pay duty on a monthly installment basis, leading to the appellant filing an appeal against this decision. The Commissioner (Appeals) subsequently dismissed the appeal, prompting the appellant to approach the present tribunal.

2. Absence of Appellant and Revenue's Position:
Notably, despite the notice, no representative appeared on behalf of the appellant during the proceedings. On the other hand, the Revenue, represented by Shri S.V. Nair, Assistant Commissioner (AR), reiterated the findings of the impugned order. The Revenue argued that the appellant was a habitual defaulter in making monthly duty payments, justifying the invocation of sub-rule (3A) of Rule 8 of Central Excise Rules, 2002 by the lower authority.

3. Legal Analysis and Decision:
Upon careful consideration of the submissions made by both parties, the tribunal examined the timeline of events and legal provisions. It was noted that sub-rule (3A) of Rule 8 was inserted via a specific notification dated 31-3-2005, coming into effect from 1-4-2005. The tribunal observed that since the default in duty occurred for the period before the effective date of this provision, i.e., prior to 1-4-2005, the order for the forfeiture of the monthly payment facility by the Assistant Commissioner was deemed illegal and lacking legal authority.

4. Conclusion and Tribunal's Decision:
In light of the above analysis, the tribunal concluded that the impugned order, which led to the forfeiture of the appellant's monthly duty payment facility, was unsustainable and set it aside. Consequently, the appeal was allowed in favor of the appellant. The tribunal's decision highlighted the importance of adhering to the legal provisions and timelines specified in the Central Excise Rules, emphasizing the need for actions to be in accordance with the law to maintain their validity.

This detailed analysis of the judgment showcases the tribunal's meticulous consideration of the legal framework, factual circumstances, and procedural aspects involved in the case, ultimately leading to a decision in favor of the appellant based on the legal principles at hand.