Tribunal Confirms Rs. 2,000 Penalty for Delayed Duty Payment.

The Tribunal confirmed a penalty under Rule 27 of the Central Excise Rules, 2002 at Rs. 2,000 for each default, totaling Rs. 2,000 against the appellants for delayed duty payment. The penalty under Rule 25 was deemed inapplicable due to the absence of fraudulent intent, resulting in the reduction of the penalty amount.

---

---

Issues: Penalty under Rule 25(1)(a) of Central Excise Rules, 2002 confirmed against the appellants. Reduction of penalty by the Commissioner (Appeals). Allegation of delayed payment without fraudulent intent. Applicability of penalty under Rule 25 and Rule 27 of Central Excise Rules, 2002.

The case involved the confirmation of a penalty under Rule 25(1)(a) of the Central Excise Rules, 2002 amounting to Rs. 2,00,000 against the appellants for delayed payment of duty between July 2006 and January 2007. The adjudicating authority initially confirmed the duty equivalent to the penalty, which was later reduced to Rs. 2 lakhs by the Commissioner (Appeals). The appellants contended that no penalty should be levied as there was no allegation of fraudulent intent or evasion of duty. They relied on a precedent where the Tribunal ruled that if duty was paid before the show cause notice and there was no intent to evade payment, the penalty was not sustainable.

The appellant argued that since there was no allegation of fraud, collusion, or intent to evade payment of duty, no penalty should be imposed. Citing a previous Tribunal decision, they emphasized that if duty was paid before the show cause notice and there was no intent to evade payment, the penalty was not justified. On the contrary, the Departmental Representative contended that mens rea was not necessary for imposing a penalty, referring to a Supreme Court case. After hearing both sides, the Tribunal acknowledged that the appellants had indeed contravened the law by not paying duty on time as required. However, since there was no evidence of mala fide intentions, the penalty under Rule 25 was deemed inapplicable.

The Tribunal concluded that while the appellants were liable for penalty under Rule 27 of the Central Excise Rules, 2002 due to the contravention of provisions, the penalty under Rule 25 was not justified in the absence of fraudulent intent. Consequently, the penalty under Rule 27 of Central Excise Rules, 2002 was confirmed at Rs. 2,000 for each default, totaling Rs. 2,000. The appeal was partly allowed based on these findings.

---

---