Excise duty default beyond one month can trigger penalty for improper removal under Rule 25(1)(a), not only Rule 27.

Where monthly central excise duty remains unpaid beyond the due date and the default continues beyond one month, Rule 8(3A) deems the goods cleared without payment of duty and triggers the penalty consequences under the Central Excise Rules, 2002. On that basis, improper removal of excisable goods attracts penalty under Rule 25(1)(a), not merely the residual penalty under Rule 27. The text notes repeated short payment, disclosure only in ER-1 returns, and payment after departmental detection, supporting the conclusion that the appellate authority's deletion of penalty was unsustainable and the penalty was restored with modification.

---

---

Issues: Whether, on failure to discharge monthly central excise duty by the due date and continuance of default beyond one month, penalty was correctly attracted under Rule 25(1)(a) of the Central Excise Rules, 2002 instead of being confined to Rule 27 of the Central Excise Rules, 2002.

Analysis: Rule 8(3A) of the Central Excise Rules, 2002 provides that where duty is not paid by the due date and the default continues, the goods in respect of which duty and interest remain unpaid are deemed to have been cleared without payment of duty, and the consequences and penalties under the Rules follow. On that basis, removal in such circumstances constitutes contravention of the Central Excise Rules and attracts the penal provision for improper removal of excisable goods. The facts showed repeated short payment for the relevant months, disclosure only in ER-1 returns, and payment made after departmental detection. In these circumstances, the earlier view that only Rule 27 applied was held inapplicable.

Conclusion: Penalty under Rule 25(1)(a) of the Central Excise Rules, 2002 was held to be attracted, and the setting aside of penalty by the Commissioner (Appeals) was set aside.

Final Conclusion: The Revenue succeeded, the penalty relief granted by the appellate authority was reversed, and the penalty was restored with modification to the amounts imposed.

Ratio Decidendi: Where monthly excise duty remains unpaid beyond the statutory due date and the default continues beyond one month, the goods are deemed to have been cleared without payment of duty, thereby attracting penalty under Rule 25(1)(a) of the Central Excise Rules, 2002 rather than limiting the case to Rule 27.

---