Penalty for Rule 8(3A) breach upheld, but reduced where no fraud or suppression was shown.

Clearing excisable goods during the period of delayed duty payment, without paying duty in cash as required by Rule 8(3A) of the Central Excise Rules, constituted a contravention attracting penalty under Rule 25. However, in the absence of material showing fraud, suppression or similar aggravated conduct, the harsher penalty provision was not justified. The penalty was therefore sustainable in principle, but its quantum had to be reduced in line with the nature of the default and the short delay in payment, and the assessee succeeded to that extent.

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Issues: Whether penalty was leviable for clearing excisable goods without paying duty in cash in contravention of Rule 8(3A) of the Central Excise Rules, 2002, and whether the penalty imposed was liable to be reduced.

Analysis: The duty and interest for the relevant months were paid after the prescribed dates, and clearances were made during the intervening period without payment of duty in cash, attracting contravention of Rule 8(3A). There was, however, no material showing fraud or similar suppression, so the harsher penalty provision was not attracted. Since the goods were cleared in breach of Rule 8(3A), penalty under Rule 25 was applicable, but the extent of penalty had to be calibrated to the nature of the default and the short delay in payment.

Conclusion: Penalty was sustainable, but the quantum was required to be reduced; the assessee succeeded to that extent.

Final Conclusion: The appeals were allowed only to the extent of reduction of penalties, while the finding of contravention and liability to penalty was maintained.

Ratio Decidendi: Where duty is cleared in breach of Rule 8(3A) without evidence of fraud, penalty may be imposed under Rule 25, but the quantum must be proportionate to the nature and duration of the default.

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