Appeal dismissed: Penalty under Rule 25 deleted, Rule 27 penalty imposed. Discretionary nature emphasized.

The appeal against the deletion of penalty under Rule 25 of the Central Excise Rules and the imposition of a penalty under Rule 27 was dismissed. The Tribunal upheld the decision to delete the penalty under Rule 25 and impose a penalty of 5000 under Rule 27. The appellant's argument that the penalty under Rule 25 should have been upheld was rejected, emphasizing the discretionary nature of Rule 25 and considering the prompt payment of duty with interest. The tax appeal was dismissed, leaving the question of law open for future consideration.

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Issues involved: Appeal against deletion of penalty under Rule 25 of the Central Excise Rules based on the mode of duty payment and imposition of a penalty under Rule 27 instead.

Analysis:
1. The issue in this case revolves around the deletion of penalty under Rule 25 of the Central Excise Rules. The appellant had paid duty through the PLA Account instead of CENVAT credit, leading to a show-cause notice and subsequent payment of duty with interest. The adjudicating authority confirmed the duty demand and imposed a penalty under Rule 25, which was later deleted by the appellate authority. Instead, a penalty of &8377; 5000/- under Rule 27 was imposed. The Tribunal upheld this decision, prompting the appeal by the department.

2. The appellant argued that the penalty under Rule 25 should have been upheld, contrary to the views of the appellate authority and the Tribunal. Rule 25 allows for confiscation of goods and a penalty not exceeding the duties on excisable goods or &8377; 5000/-, whichever is greater. The discretionary nature of this rule gives the authority the power to impose a penalty up to the specified limits. In this case, the Tribunal considered the prompt payment of duty with interest upon breach notification and the discretionary aspect of Rule 25. Consequently, the tax appeal was dismissed, leaving the question of law open for future consideration.

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