2010 (1) TMI 403 - AT - Central Excise

Department appeals penalties under Central Excise Rules, 2002; Tribunal rejects, emphasizes due diligence

The Department filed appeals against penalty imposition under the Central Excise Rules, 2002. The Commissioner (Appeals) rejected the appeals seeking ... Penalty- The original authority, in a case involving demand of duty of Rs. 16,821/- against M/s. Jai Hind Bidi Co. besides confirming the demand of duty and interest imposed penalty of Rs. 16,821/- under Section 11AC on the said firm and in addition, imposed a penalty of Rs. 2,000/- on Shri Mohd. Islam, proprietor of M/s. Jai Hind Bidi Co. under Rule 26 of Central Excise Rules, 2002. He also imposed penalty of Rs. 2000/- on Shri Govind Das authorised signatory of M/s. Jai Hind Bidi Co. under Rule 26 of Central Excise Rules, 2002. Held that-The Larger Bench of the Tribunal in the case of C.C.E., Bhopal v. Rama Wood Craft (P) Ltd. 2008 -TMI - 49056 - CESTAT, PRINCIPAL BENCH, NEW DELHI has held that there is no minimum prescribed in Rule 25 of Central Excise Rules, 2002 while interpreting the words “shall be liable to penalty not exceeding duty on the excisable goods .......... or rupees ten thousand whichever is greater”. The wordings in relation to quantum of duty in Rule 26 is also identical. Therefore, it is clear that there is no minimum penalty prescribed under Rule 26 of the Central Excise Rules. Issues:Appeals against penalty imposition under Central Excise Rules, 2002Analysis:The judgment pertains to two appeals filed by the Department against an order involving a demand of duty and penalties under the Central Excise Rules, 2002. The original authority imposed penalties on the firm and individuals, including a penalty on the proprietor. The Commissioner (Appeals) rejected the appeals seeking enhancement of penalties, stating that Rule 26 does not prescribe a minimum penalty of Rs. 10,000. The Committee of Commissioners directed filing an appeal before CESTAT. The Department appealed against the concurrent findings of the original authority and Commissioner (Appeals) on an issue not affecting revenue.The Commissioner (Appeals) clarified that Rule 26 does not specify a minimum penalty, only a maximum limit. The Committee directed the appeal despite this reasoning. The Larger Bench of the Tribunal in a previous case held that Rule 25, with similar wording, does not have a minimum penalty. Consequently, the Tribunal found no merit in the Department's appeals against the penalties imposed, which were favorable to the party. The appeals by the Department were ultimately rejected.The judgment emphasizes that the appeals were filed casually, with prayers lacking proper consideration. Upholding the Review Order would have been redundant as the Commissioner (Appeals) had already given a decision. The Tribunal highlighted the need to discourage the filing of such appeals without due diligence. The analysis of Rule 26 of the Central Excise Rules, 2002 and the precedent set by the Larger Bench clarified the absence of a minimum penalty requirement, leading to the rejection of the Department's appeals.