Delayed central excise duty payment attracts penalty, but the quantum may be reduced where the default is limited and non-clandestine.

Failure to pay central excise duty within the stipulated time under Rule 8 attracted penal consequences, even though the matter did not involve clandestine removal. The clearances during the default period were treated as non-duty-paid for penalty purposes because duty had remained unpaid for three months. Penalty was therefore sustained in principle, but the extent of the default justified further reduction of the amount already cut by the Commissioner (Appeals). The penalty was reduced from Rs. 30,000 to Rs. 15,000 each for the two units.

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Issues: Whether penalty for delayed payment of central excise duty under Rule 8 of the Central Excise Rules was warranted and whether the penalty deserved further reduction.

Analysis: The appellants had defaulted in payment of duty for three months, and the clearances were therefore treated as non-duty-paid for the purpose of penalty. The case was not one of clandestine removal, but the admitted failure to pay duty within the stipulated time attracted penal consequences. Considering the nature and extent of the default, the penalty already reduced by the Commissioner (Appeals) was found liable to be scaled down further.

Conclusion: Penalty was upheld in principle, but the quantum was further reduced from Rs. 30,000/- to Rs. 15,000/- each for the two units.

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