Tribunal grants stay on penalty recovery under Central Excise Rules

The Tribunal granted a stay on the recovery of a penalty of Rs. 50,000 imposed under Rule 25 of Central Excise Rules, 2002 for default in duty payment under Rule 8 (3A). Relying on precedent and citing that penalties for delays in duty payment cannot be imposed under Rule 25, the Tribunal found in favor of the appellant, referencing both High Court judgments and its own decision in a similar matter. The appellant established a prima facie case for waiving the pre-deposit of the penalty amount, leading to the stay on penalty recovery until the appeal is resolved.

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Issues:
1. Imposition of penalty under Rule 25 of Central Excise Rules, 2002 for default of payment of duty under Rule 8 (3A).

Analysis:
The appellant filed a stay petition against the Order-in-Appeal imposing a penalty of Rs. 50,000 under Rule 25 of Central Excise Rules, 2002 for default in duty payment under Rule 8 (3A). The appellant argued, citing the judgment of the High Court of Gujarat in a similar case, that penalty cannot be imposed under Rule 25 for such defaults. The appellant also relied on judgments like Tejpal Paper Mills Limited vs. CCE, Ahmd. and Shree Ashok Kumar Manibhai Patel & Company vs. CCE, Bhopal to support their argument.

The Revenue, represented by Shri Manoj Kutty, contended that penalties under Rule 25 are applicable for defaults under Rule 8 (3A), referring to cases like Pee Dee Polymers vs. CCE, Ahmd. and Weldon Cello Plast Limited vs. CCE, Delhi. After hearing both sides and examining the case laws presented, the Tribunal noted that the jurisdictional High Court had previously ruled that penalties for delays in duty payment cannot be imposed under Rule 25. The Tribunal also referenced its own decision in Siyaram Packaging Pvt. Limited vs. CCE Daman, where a similar view was taken. Consequently, the Tribunal found that the appellant had established a prima facie case for waiving the pre-deposit of the penalty amount, granting a stay on the recovery of the penalty until the appeal is disposed of. The order was dictated and pronounced in court by Mr. H.K. Thakur.

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