2014 (9) TMI 734 - AT - Central Excise

Tribunal Upholds Penalty Reduction, Rejects Appeal on Central Excise Rule Compliance

The Tribunal upheld the reduction of penalty by the Commissioner (Appeals) from Rs. 2,02,162 to Rs. 50,000 and rejected the appellant's appeal. ... Imposition of Penalty - Violation of Rule 8(3A) - Held that:- Rule 8 (3A) categorically states that the assessee shall pay excise duty for each consignment at the time of removal, without utilizing the Cenvat credit till the assessee pays the outstading amount including interest thereon. The consequence for non-payment of excise duty is also indicated in the very same section as it provided that in case of failure to pay the amount, it shall be deemed that such goods have been cleared without payment of duty and the consequence of penalties as provided in the rules would follow. Rule 8(3A) does not permit the assessee to pay the excise duty by using the Cenvat credit. The provision retrained the assessee from using Cenvat credit till the entire outstanding amount including interest is paid. The explanation is only for the purpose of making the position clear. violation of Rule 8(3A) of the Central Excise Rules, 2002 are clearly proved. Provisions Rule 8(3A) are self-contained requiring penal actions. Penalty is imposable - Decided against assessee. Issues:1. Reduction of penalty by Commissioner (Appeals) from Rs. 2,02,162 to Rs. 50,000.2. Allegation of double payment by the appellant.3. Applicability of Rule 8(3A) of the Central Excise Rules, 2002.4. Justification of penalty imposition for default in duty payment.5. Interpretation of legal precedents regarding Rule 8 compliance.Analysis:Issue 1: Reduction of PenaltyThe appeal was filed against the reduction of penalty by the Commissioner (Appeals) from Rs. 2,02,162 to Rs. 50,000. The Tribunal examined the facts where the appellant failed to pay the duty on time, leading to the imposition of penalty. The Commissioner (Appeals) had already taken a lenient view in reducing the penalty. The Tribunal found no reason for further modification and rejected the appellant's appeal.Issue 2: Allegation of Double PaymentThe appellant claimed they had made double payments, which was not acknowledged by the Commissioner (Appeals). However, a report from the Assistant Commissioner clarified the payment details, stating that the duty in question had not been paid twice by the appellant. The Tribunal considered this report in assessing the appellant's claim of double payment.Issue 3: Rule 8(3A) ComplianceThe matter revolved around the violation of Rule 8(3A) of the Central Excise Rules, 2002, which mandates payment of duty within a specified period. The appellant's default in paying duty on time was not contested. The Tribunal emphasized the importance of adhering to Rule 8(3A) and its consequences for non-compliance.Issue 4: Penalty ImpositionThe Tribunal discussed the imposition of penalty for default in duty payment as per Rule 8(3A). The appellant's argument that no penalty should be levied as duty was paid before the show cause notice was issued was considered. However, the Tribunal upheld the penalty imposition, citing the mandatory nature of compliance with Rule 8(3A) and the consequences for delayed payment.Issue 5: Interpretation of Legal PrecedentsThe Tribunal referred to legal precedents, such as the Gujarat High Court and Madras High Court judgments, emphasizing the mandatory nature of Rule 8 compliance. These judgments highlighted that excise duty must be paid without utilizing Cenvat credit until the outstanding amount, including interest, is cleared. The Tribunal relied on these precedents to support the penalty imposition in the present case.In conclusion, the Tribunal upheld the reduction of penalty by the Commissioner (Appeals) and rejected the appellant's appeal, emphasizing the importance of complying with Rule 8(3A) and the consequences for default in duty payment. The legal precedents cited reinforced the Tribunal's decision regarding penalty imposition and compliance with the Central Excise Rules.