2016 (8) TMI 1347 - AT - Central Excise

Tribunal upholds duty and interest, cancels penalty under Rule 25 due to appellant's compliance and financial challenges.

M/s. Associated Pigments Ltd Versus Commr. of Central Excise, Haldia

The Tribunal upheld the confirmation of duty and interest but set aside the penalty imposed under Rule 25 of the Central Excise Rules, 2002. The ... Penalty u/r 25 and section 11AC - Held that: - appellant had duly reflected the entire Service Tax liability in the periodical returns filed with the Department and accordingly it is held that there can not be any malafide intention on the part of the appellant to evade payment of Service Tax - Service Tax law provides for delayed payment of Service Tax alongwith interest which has been duly complied by the appellant - appeal allowed in part. Issues:1. Upholding of Order-in-Original by the Commissioner of Central Excise2. Confirmation of demand of duty and interest3. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002Analysis:1. The appellant filed an appeal against Order-in-Appeal No. 27/HAL/07 dated 26/07/2007 issued by the Commissioner of Central Excise (Appeal-I), Kolkata, which upheld Order-in-Original dated 31/01/2006 confirming a demand of Rs. 11,56,939/- along with interest and imposing a penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.2. The appellant did not contest the duty liability and interest, having paid the entire amount. The Revenue representative stated that the appellant reflected the tax liability in the returns and faced financial difficulties due to being registered with BIFR. The Tribunal noted that the duty liability and interest were not contested by the appellant, thus upholding the Order-in-Appeal to that extent.3. Regarding the imposition of an equivalent penalty, it was observed that the appellant had duly reflected the Service Tax liability in the returns, indicating no malicious intent to evade payment. The Service Tax law allows for delayed payment with interest, which the appellant complied with. Consequently, the Tribunal held that there was no basis for imposing a penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The appeal was allowed only to the extent of setting aside the penalty.In conclusion, the Tribunal upheld the confirmation of duty and interest while setting aside the penalty imposed under Rule 25 of the Central Excise Rules, 2002. The appellant's financial difficulties and compliance with the tax laws were considered in the decision.