2009 (5) TMI 465 - AT - Central Excise

Appeal Upheld: Debarment for Duty Default, Token Penalty Imposed

The appeal challenged the debarment of the appellants from deferred payment facility due to default in duty payment. The Commissioner (Appeals) upheld the ... Payment of duty-Penalty-Interest- the Asst. Commissioner has debarred the appellants under Rule 8(4) (ii) of the Central Excise Rules, 2001 from deferred payment facility vide his letter dated 8-2-2002 issued in C.No. IV/11/2003/STAT/2000/592 consequent to the third default in duty payment in the financial year 2001-02 by the appellants. Commissioner (Appeals) confirm the duty and imposed penalty. In the light of the various decisions held that- the duty amount paid by the appellant in RG23A Part-II has to be considered as discharged duty liability. Coming to the invoking the provisions of interest, we find that the interest is payable as appellant has not discharged the duty liability within time. We uphold the order of the lower authorities to the extent the interest liability has been confirmed. As regards imposition of penalty, we find that the Adjudicating authority has imposed equal penalty under the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. We find that the violation of the law in this case by the appellant is only to the extent that he has not followed the directions of the Adjudicating authority to pay the duty in PLA consignment wise. This cannot be equated with the stringent provisions of Section 11AC for the purpose of imposing equal penalty under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act, 1944. In the facts and circumstances of the case, we are of the considered view that a token penalty of Rs.10,000/- (Rupees ten thousand only) would suffice to meet the ends of justice. Issues:1. Debarment under Rule 8(4)(ii) of the Central Excise Rules, 2001.2. Misstatement of duty payment and imposition of penalty.3. Discharge of duty liability and imposition of interest.4. Imposition of penalty under Rule 25 of Central Excise Rules, 2002.Debarment under Rule 8(4)(ii) of the Central Excise Rules, 2001:The appeal challenged the debarment of the appellants from deferred payment facility by the Asst. Commissioner due to a third default in duty payment in the financial year 2001-02. The Asst. Commissioner debarred the appellants until all dues were paid or for a period of two months. The appellants cleared goods without debiting the duty due consignment-wise, leading to confirmation of demand and penalty imposition. The Commissioner (Appeals) upheld the order, emphasizing that financial difficulties did not excuse non-compliance with statutory obligations.Misstatement of duty payment and imposition of penalty:The appellants misstated duty payments as being made in PLA consignment-wise when they were not, justifying penalty imposition. The appellants' argument of financial difficulties and resorting to debiting the Cenvat account was rejected as mandatory duty payment through Account Current was not followed. The contention that penalty imposition was illegal as duty was paid before the show cause notice was also dismissed.Discharge of duty liability and imposition of interest:The appellant failed to discharge duty liability as per Rule 8 of the Central Excise Rules, forfeiting the facility of paying duty fortnightly. The appellant debited duty payable in RG23A Part-II instead of following directions to clear goods by debiting in PLA consignment-wise. The Tribunal held that duty paid in RG23A Part-II before 31-3-2005 should be considered as discharged duty liability. Interest liability was confirmed as duty was not discharged on time.Imposition of penalty under Rule 25 of Central Excise Rules, 2002:The Adjudicating authority imposed a penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The Tribunal found the appellant's violation was not severe enough to warrant the stringent penalty under Section 11AC. A token penalty of Rs.10,000 was deemed sufficient in this case, balancing justice and compliance.This detailed analysis of the judgment covers the issues of debarment, misstatement of duty payment, discharge of duty liability, and imposition of penalty, providing a comprehensive overview of the legal reasoning and outcomes of the case.