Delayed excise duty payment can attract penalty, while prior payment before notice does not automatically remove liability.

Delayed payment of fortnightly excise duty instalments was treated as a breach of Rule 8(1) of the Central Excise Rules, 2002 and as conduct capable of attracting penalty under Rule 25(1)(a) for contravention of the rules. Payment of duty before issuance of the show cause notice did not, by itself, eliminate penal liability. The text also notes that where the delay was largely minor and occurred mainly in one instance, the penalty amount could be moderated on the facts.

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Issues: Whether delayed payment of fortnightly excise duty instalments constituted a contravention of Rule 8 of the Central Excise Rules, 2002 so as to attract penalty under Rule 25(1)(a), and whether the penalty imposed required reduction.

Analysis: The default in making payment by the due dates was held to be a breach of Rule 8(1). The conduct also fell within the penal consequence contemplated by Rule 25(1)(a) for removal of excisable goods in contravention of the rules. The fact that the duty had been paid before issue of the show cause notice did not confer immunity from penalty. At the same time, the circumstances showed that the longer delay occurred only in one instance and the bulk of the payments were delayed for a few days, which justified moderation in the quantum of penalty.

Conclusion: Penalty under Rule 25 was upheld, but its amount was reduced.

Final Conclusion: The assessee remained liable to penalty for breach of the duty payment discipline, though the penalty was scaled down on the facts.

Ratio Decidendi: Delay in payment of duty instalments is a contravention of the excise rules that can attract penalty under the rule providing for penal consequences for violation of the rules, and prior payment of duty before the show cause notice does not automatically extinguish such liability.

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