2009 (11) TMI 806 - AT - Central Excise

Penalty for late duty payment upheld after appeal, reduced to Rs. 5000.

The penalty imposed on the respondent for delay in paying duty was appealed against. The Commissioner (Appeals) had set aside the penalty, but the ... Deemed non-duty paid clearances under Rule 8(3) - penalty under proviso to Rule 25 for suppression/misstatement - conversion of penalty under Rule 27 - consequences of deemed non-duty paid clearances including seizure/confiscation - penal liability for delay in payment beyond one monthDeemed non-duty paid clearances under Rule 8(3) - penal liability for delay in payment beyond one month - Delay in payment of duty beyond one month attracts the deeming provision of Rule 8(3) making clearances non-duty paid. - HELD THAT: - The respondent failed to pay duty for February, 2004 within the prescribed period and paid the duty and interest belatedly. The Tribunal held that this delay beyond one month falls squarely within the ambit of Rule 8(3) so that the clearances are to be treated as not duty paid. The consequence of the deeming is that statutory consequences follow, including the theoretical liability to seizure/confiscation if goods are available, even though no seizure was in fact effected. [Paras 5]The Tribunal affirmed that Rule 8(3) is attracted by the delay and that the clearances are deemed non-duty paid.Penalty under proviso to Rule 25 for suppression/misstatement - distinction between suppression and mere delay - Imposition of penalty equal to duty under the proviso to Rule 25 treating the case as involving suppression/misstatement was not warranted. - HELD THAT: - The Tribunal found that the case did not involve unaccounted production, clandestine removal, or suppression; the production was recorded, invoices were raised and monthly returns filed. Although there was delay in payment, the facts did not support characterization as suppression or misstatement under the proviso to Rule 25. Consequently, the imposition of an equal-amount penalty under Rule 25 was inappropriate and could not be sustained. [Paras 5]The Tribunal held that the conditions for imposing the penalty under the proviso to Rule 25 were not satisfied and such penalty could not be sustained.Conversion of penalty under Rule 27 - The penalty imposed under Rule 25 was converted to a token penalty under Rule 27. - HELD THAT: - Balancing that Rule 8(3) was attracted (deeming clearances as non-duty paid) but that there was no suppression or clandestine removal, the Tribunal exercised its power to moderate the penalty. It set aside the Commissioner (Appeals) order which had wholly remitted the penalty, restored the original authority's finding of deemed non-duty paid clearances, and converted the substantial penalty imposed under Rule 25 into a reduced penalty under Rule 27 to reflect the absence of suppression. [Paras 6]The Tribunal restored the original authority's order subject to converting the penalty under Rule 25 into a penalty of Rs. 5,000 under Rule 27.Final Conclusion: The appeal is allowed in part: the Tribunal held that delayed payment for February, 2004 attracts Rule 8(3) deeming clearances non-duty paid, rejected characterization as suppression warranting penalty under the proviso to Rule 25, and accordingly converted the penalty into a reduced penalty under Rule 27 while restoring the original authority's order. Issues involved: Appeal against penalty imposed for delay in payment of duty under Rule 8(3) of the Central Excise Rules, 2002.Summary:The appeal was filed against the penalty imposed on the respondent for failing to pay duty on time, as per the order of the Commissioner (Appeals) dated 4-10-07. The original authority held that due to the delay in payment of dues, the clearances were deemed as not duty paid, leading to the imposition of a penalty. However, the Commissioner (Appeals) set aside the penalty.The learned DR argued that the respondent attracted penal provisions by not paying duty on time and requested setting aside the Commissioner (Appeals) order. After considering the submissions and records, it was noted that there was a delay in payment of dues, but it was not a case of unaccounted production or clandestine removal. The goods were cleared with proper documentation and monthly returns were submitted. While the delay in payment did attract Rule 8(3) provisions, treating the case as involving suppression or misstatement was deemed unnecessary.The order of the Commissioner (Appeals) was set aside, and the original authority's decision was restored. The penalty imposed under Rule 25 was reduced to Rs. 5000 under Rule 27 of the Central Excise Rules, 2002. The appeal was disposed of accordingly.