2018 (3) TMI 980 - AT - Central Excise

Reduction of penalty u/r 25 of CER, 2002 - intent to evade duty not present - Held that - the duty has been paid by the respondent along with interest and there was no intention to evade duty and therefore, the imposition of penalty under Rule 25 is not warranted. Penalty u/r 27 - Held that - there is no infirmity in imposing the penalty under Rule 27 which is a general penalty for committing violation of a Rule - penalty upheld. Appeal allowed in part.

Summary

Issues:
Appeal against reduced penalty under Rule 25 of Central Excise Rules - Validity of penalty imposition - Constitutional validity of Rule 8(3A) of Central Excise Rules - Financial problems as a reason for non-payment - Intention to evade duty - Imposition of penalty under Rule 27.

Analysis:
The case involved an appeal by the Revenue against an order reducing the penalty under Rule 25 of the Central Excise Rules. The Commissioner (Appeals) had reduced the penalty to 5% of the duty demanded. The dispute arose when the respondent, a manufacturer of M.S. Ingots, defaulted in duty payment beyond thirty days from the due date. The respondent paid duty utilizing cenvat credit instead of paying on a consignment basis, leading to penalties under Rule 25 and 27 of the Central Excise Rules, 2002.

The Revenue argued that the reduction of penalty by the Commissioner (Appeals) was not legal and proper, emphasizing that the original penalty under Rule 25 should have been upheld. On the other hand, the respondent contended that the penalty imposition was unsustainable in law due to the declared unconstitutionality of Rule 8(3A) of the Central Excise Rules. Citing various court decisions, the respondent argued that the violations should be treated as procedural due to financial difficulties.

After hearing both parties, the Tribunal considered the duty payment, interest, and the lack of intention to evade duty. The Tribunal found that the duty had been paid by the respondent, and there was no intent to evade duty. Consequently, the imposition of penalty under Rule 25 was deemed unwarranted, leading to the setting aside of the penalty under Rule 25. However, the Tribunal upheld the penalty under Rule 27, considering it a general penalty for rule violations.

In conclusion, the Tribunal set aside the penalty under Rule 25 but upheld the penalty under Rule 27, emphasizing the lack of intent to evade duty as a crucial factor in the decision-making process. The judgment was pronounced on 10/01/2018 by the Tribunal.