Tribunal overturns penalty for late Central Excise payment, citing prompt rectification

The Tribunal set aside the penalty imposed under Section 11AC for delayed payment of Central Excise duty, ruling in favor of the appellant. The appellant's voluntary payment of duty before any notice was served, as per Section 11A(2B), was deemed compliant. The Tribunal distinguished the case from precedents, noting the absence of malafide intent or suppression. The delay in payment was rectified promptly, leading to the conclusion that no penalty should have been imposed under Section 11AC.

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Issues:
1. Delay in payment of Central Excise duty leading to imposition of penalty under Section 11AC.

Detailed Analysis:

Issue 1: Delay in payment of Central Excise duty leading to imposition of penalty under Section 11AC
The appellant, engaged in the manufacture of excisable goods, failed to pay Central Excise duty amounting to Rs. 4,98,859/- for May 2007 as per Rule 8 of Central Excise Rules, 2002. The duty was eventually paid on 27/8/2007 with interest. Similar delays occurred in June and July 2007, with duty being paid after more than 30 days. Consequently, the goods cleared in July and August 2007 without payment of duty were held liable for confiscation and penalty under Rule 25(1)(a) of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the penalty, leading to the appellant's appeal.

The appellant argued that they voluntarily paid the duty along with interest before any show cause notice was issued, as per sub-section (2B) of Section 11A of the Central Excise Act, 1944. They contended that since the duty details were disclosed in their monthly returns and separately intimated to the department, no penalty should have been imposed under Section 11AC. The appellant emphasized that there was no malafide intent or suppression, only a delay in payment, which was rectified promptly.

The Revenue, however, supported the penalty imposition under Section 11AC, citing Rule 8 of the Central Excise Rules, 2002, which treats delayed payments as clearances without duty payment, necessitating penalties. They relied on judicial precedents to justify the penalty imposition.

The Tribunal noted that the appellant had paid the duty along with interest before any notice was served, as per sub-section (2B) of Section 11AC, which precludes the issuance of show cause notices in such cases. The Tribunal found that the appellant's case did not involve clandestine removal of goods but only a delay in monthly duty payment, distinguishing it from the cited judicial precedents. Consequently, the Tribunal set aside the penalty imposed under Section 11AC, ruling in favor of the appellant.

In conclusion, the Tribunal allowed the appeal, emphasizing that since the duty was paid before any notice was served, no penalty should have been imposed, as the appellant's actions were in compliance with the relevant legal provisions.

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