Consignment-wise duty payment and delayed return filing can sustain penalties under central excise rules after default persists beyond 30 days.

Default beyond 30 days after the 1.6.2006 amendment to Rule 8(3A) required consignment-wise duty payment by debit to the current account without using CENVAT credit until dues with interest were cleared, and that contravention sustained penalty under Rule 25 of the Central Excise Rules, though the quantum was reduced. Admitted late filing of monthly returns independently justified the minor penalty under Rule 27. Earlier decisions cited by the assessee were distinguished as factually and temporally different. The substantive finding of contravention was maintained, with separate treatment of the duty-payment default and the delayed return filing.

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Issues: (i) Whether penalty under Rule 25 of the Central Excise Rules, 2002 was leviable for default in duty payment contrary to Rule 8(3A) of the CENVAT Credit Rules, 2004. (ii) Whether penalty under Rule 27 of the Central Excise Rules, 2002 was justified for failure to file monthly returns within time.

Issue (i): Whether penalty under Rule 25 of the Central Excise Rules, 2002 was leviable for default in duty payment contrary to Rule 8(3A) of the CENVAT Credit Rules, 2004.

Analysis: The default continued beyond 30 days, and after the 1.6.2006 amendment to Rule 8(3A), the assessee was required to pay duty for each consignment by debit to the account current without utilizing CENVAT credit until all dues with interest were paid. The earlier decisions relied upon by the assessee were distinguished because they were rendered on materially different facts and under an earlier regime. The contravention therefore attracted the penal consequence contemplated by the rules.

Conclusion: Penalty under Rule 25 was sustainable, but the quantum was reduced to Rs. 25,000.

Issue (ii): Whether penalty under Rule 27 of the Central Excise Rules, 2002 was justified for failure to file monthly returns within time.

Analysis: The monthly returns were admittedly filed late. That default independently attracted the minor penalty provision under Rule 27.

Conclusion: Penalty under Rule 27 was upheld.

Final Conclusion: The substantive finding of contravention was maintained, but the penalty under Rule 25 was substantially reduced while the separate penalty for delayed return filing remained in force.

Ratio Decidendi: Once the assessee defaults beyond 30 days after the 1.6.2006 amendment, Rule 8(3A) requires consignment-wise duty payment without CENVAT credit and contravention of that mandate can sustain penalty under Rule 25, while admitted delayed filing of returns supports penalty under Rule 27.

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