2009 (5) TMI 674 - AT - Central Excise

Review of Rule 26 Amendment Impact on Penalty Waiver under Section 35F: Appellate Tribunal Decision

KUMAR ABHISHEK ENGINEERING CO. PVT. LTD. Versus COMMR. OF CUS., C. EX., NOIDA

KUMAR ABHISHEK ENGINEERING CO. PVT. LTD. Versus COMMR. OF CUS., C. EX., NOIDA - 2009 (246) E.L.T. 440 (Tri. - Del.) Issues:Interpretation of Rule 26 of Central Excise Rules, 2002 prior to 1-3-2007 and its applicability to excise duty notices issued without dealing with goods. Consideration of penalty imposition under Rule 26. Impact of amendment to Rule 26 under Notification No. 8/2007-C.E., dated 1-3-2007. Prima facie case for waiver of penalty amount under Section 35F of the Act. Assessment of undue hardship to the appellant in depositing penalty during appeal pendency. Balance of interests between the appellant and Revenue.Analysis:The judgment by the Appellate Tribunal CESTAT, NEW DELHI, involved a thorough analysis of the provisions of Rule 26 of the Central Excise Rules, 2002, particularly focusing on the period before 1-3-2007. The appellant contended that under the previous version of Rule 26, the mere issuance of an excise duty notice without actual dealing with the goods did not justify penalty imposition. The penalty in question was imposed under Rule 26 for the period spanning April 2002 to January 2006. The appellant highlighted an amendment to Rule 26 through Notification No. 8/2007-C.E., dated 1-3-2007, emphasizing that liability for excise duty notice without goods dealing would only arise post this amendment.The Tribunal acknowledged the appellant's argument and found a prima facie case for waiver of the penalty amount under Section 35F of the Act. It was noted that compelling the appellant to deposit the entire penalty during the appeal pendency would result in undue hardship. The Tribunal opined that no prejudice would be caused to the Revenue's interest by granting waiver under Section 35F. Therefore, the Tribunal allowed the applications, waiving the penalty amount imposed in the impugned order until the appeals are disposed of. The appeals were directed to be listed for hearing in due course, ensuring a fair balance of interests between the appellant and the Revenue.In conclusion, the judgment delved into the nuances of Rule 26 of the Central Excise Rules, 2002, pre-amendment and post-amendment, addressing the issue of penalty imposition for excise duty notices without goods dealing. The decision to waive the penalty amount under Section 35F showcased a consideration of the appellant's hardship during the appeal process while ensuring a fair assessment of interests between the appellant and the Revenue.