2017 (9) TMI 503 - HC - Central Excise

Penalty u/r 25 of CER, 2002 - default of payment u/r 8(3A) of CER, 2002 - Held that - Rule 25 prescribes confiscation of goods upon breach of the conditions set out therein and penalty not exceeding the duties on excisable goods in respect of which such contravention is deducted or ₹ 5000/- whichever is greater - In the present case, the Tribunal emphasized on the facts that soon upon being informed about the breach, the assessee had paid the entire duty with interest - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues involved: Appeal against deletion of penalty under Rule 25 of the Central Excise Rules based on the mode of duty payment and imposition of a penalty under Rule 27 instead.

Analysis:
1. The issue in this case revolves around the deletion of penalty under Rule 25 of the Central Excise Rules. The appellant had paid duty through the PLA Account instead of CENVAT credit, leading to a show-cause notice and subsequent payment of duty with interest. The adjudicating authority confirmed the duty demand and imposed a penalty under Rule 25, which was later deleted by the appellate authority. Instead, a penalty of &8377; 5000/- under Rule 27 was imposed. The Tribunal upheld this decision, prompting the appeal by the department.

2. The appellant argued that the penalty under Rule 25 should have been upheld, contrary to the views of the appellate authority and the Tribunal. Rule 25 allows for confiscation of goods and a penalty not exceeding the duties on excisable goods or &8377; 5000/-, whichever is greater. The discretionary nature of this rule gives the authority the power to impose a penalty up to the specified limits. In this case, the Tribunal considered the prompt payment of duty with interest upon breach notification and the discretionary aspect of Rule 25. Consequently, the tax appeal was dismissed, leaving the question of law open for future consideration.