Tribunal overturns penalties under Central Excise Act, imposes new penalties under Rule 27.

The tribunal set aside penalties imposed under Section 11AC of the Central Excise Act, 1944, and imposed penalties under Rule 27 instead. Penalties on the Director and Financial Controller under Rule 26 were also set aside as their ignorance in verifying and reconciling accounts did not warrant penalties. The tribunal found that the individuals had a genuine belief that the cheques were debited. Consequently, the appeals were disposed of in favor of the appellants.

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Issues:
1. Defect memo issued by the registry for non-payment of fee for an application filed for out of turn hearing.
2. Imposition of penalty under Section 11AC of Central Excise Act, 1944 for non-payment of amount indicated in TR-6 Challans.
3. Reduction of penalty by the learned Commissioner (A) and the appeal to the tribunal against the order.
4. Applicability of Rule 26 of the Central Excise Rules, 2002 on Director and Financial Controller for penalties imposed.

Analysis:

1. The matter was brought to the notice of the bench regarding a defect memo issued by the registry for non-payment of fee for an application filed for out of turn hearing. The appellants removed the defect by submitting an acknowledgment for payment of fee via DD. Consequently, the appeals were taken up for disposal.

2. The appeals were directed against an Order-in-Appeal passed by the Commissioner of Central Excise, Bangalore, regarding non-crediting of an amount to the Government account as indicated in TR-6 Challans. The lower authorities concluded that the appellant company had not taken reasonable steps for payment, leading to the imposition of penalties under Section 11AC. The Adjudicating Authority confirmed the demand and penalties, which were later reduced by the learned Commissioner (A). The appellants challenged this order before the tribunal.

3. The learned counsel argued that the penalties imposed were improper as there was no reason to invoke Section 11AC. He cited a Tribunal judgment and a High Court decision supporting the contention that penalties should be set aside if there was a genuine belief despite dishonored cheques. The tribunal found that Section 11AC penalties were not applicable and imposed a penalty under Rule 27 instead.

4. Regarding penalties on the Director and Financial Controller under Rule 26, the tribunal held that their ignorance in verifying and reconciling accounts did not warrant penalties under this rule. The tribunal reasoned that the individuals were under a bona fide belief that the cheques were debited, thus setting aside the penalties imposed on them. The appeals were disposed of accordingly.

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