2015 (7) TMI 581

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....f Rule 8(3A) from 6.12.2010 to 14.12.2010. Similarly, the appellant defaulted in monthly payment for the clearances made during November and December 2010 and even in respect of clearances made in November 2010 they violated the provisions of Rule 8(3A) from 6.1.2011 to 7.1.2011. In respect of default in payment during December 2010, they violated the above mentioned conditions of Rule 8(3A) from 6.2.2011 to 23.2.2011. The total duty involved in the above mentioned clearances against the provisions of Rule 8(3A) amounted to Rs. 7,16,391/-. Accordingly the appellant was issued a show cause notice asking them to pay the said amount along with interest and penalty under Rule 25 read with Section 11AC. The case was adjudicated and the original authority confirmed the demand as also interest and penalty. The appellant filed appeal before the first appellate authority who, after considering the submission of the appellant, confirmed the demand and interest. However, the penalty was reduced to Rs. 3,00,000/- under Rule 25 of the Central Excise Rules, 2002. Aggrieved by the said decision the appellant is before this Tribunal. 2. The main contention of the appellant is that the Hon'b....

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.... and the goods cleared are liable to be confiscated as per Rule 25(1)(a). 3.2 The learned AR further submitted that penalty has been imposed under Rule 25 in the impugned order and is perfectly in line with Rule 25 and the penalty is imposable. The facts of the case in Saurashtra Cement Ltsd. Argued by the learned counsel were different. There the issue was not relating to Rule 8(3A) but Rule 8(3) alone as it existed at that time. Further, in the said case, the Hon'ble High Court has come to the conclusion that penalty cannot be imposed under Rule 25 as none of the sub-clause (a), (b), (c) or (d) were inovkable in the facts and circumstances of the case. In view of the said position, the case law is not applicable and penalty has been correctly imposed. He further submitted that the first appellate authority has already reduced the penalty substantially and hence the impugned order may be upheld. 4. I have gone through the submissions of both the sides and also the judgments quoted by the learned counsel for the appellant. To appreciate the issue, the provisions of Rule 8(3A) are reproduced below:- "If the assessee defaults in payment of duty beyond thirty days from th....

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....ically a mechanism for stringent recovery and does not create a new liability unless this mechanism itself is breached. In such a mechanism to provide for withdrawal of CENVAT credit facility for paying the duty borders to creating a penalty. Insisting on an assessee in default to clear all consignments on payment of duty would be a perfectly legitimate measure. However, to insist that he must pay such duty without utilising CENVAT credit which is nothing but the duty on various inputs already paid by him would be a restriction so harsh and out of proportion to the aim sought to be achieved, the same must be held to be wholly arbitrary and unreasonable. We may recall, the delegated legislature in its wisdom now dismantled this entire mechanism and instead has provided for penalty at the rate of 1% per month on delayed payment of duty. 36. In the result, the condition contained in sub-rule (3A) of rule 8 for payment of duty without utilizing the cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion "without utilizing the cenvat credit" of sub-rule (3A) of rule 8 of the Central Excise Rules, 2002, shall b....

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....to confiscation and the producer or manufacturer or registered person of the warehouse, or a registered dealer , as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or two thousand rupees, whichever is greater.   It would be seen that the present situation is covered by clause (a) of Rule 25(1) as the appellant has removed the excisable goods without payment of duty consignment-wise. It would thus be seen that the appellant has contravened Rule 25(1)(a) and, therefore, the goods cleared during the period are liable to confiscation and the appellant is also liable to penalty not exceeding the duty on the excisable goods. 4.3 I have also gone through the judgment of the Hon'ble High Court of Gujarat in the case of Saurashtra Cement Ltd. reported in 2010 (260) ELT 71 (Guj.). In the said case, the Hon'ble High Court has come to the conclusion that the appellant has not violated any of the sub-clauses (a), (b), (c) or (d) of Rule 25 (1) and, therefore, no penalty is imposable under Rul....