Shree Ashok Kumar Manibhai Patel & Co. vs Commr. of C. & C. Ex., Bhopal

Shri Arya Bhatt, learned counsel for the appellant. This is an appeal under Section 35G of the Central Excise Act, 1944 filed by the assessee challenging the penalty imposed against the assessee under Rule 27 of the Central Excise Rules, 2002.

The only ground canvassed at the time of hearing of this appeal is that in the show-cause notices issued in the matter of imposition of penalty only violation of Rule 25 was pointed out but, without issuing notice, the penalty is imposed under Rule 27 and, therefore, the same is unsustainable.

Appellant is a manufacturer of Handmade Biris and for the said purpose it is established in Gosalpur, Mirzapur Road, Jabalpur, it is said that the appellant was subject to payment of Excise duty for the period from July, 2006 to January 2007 and on account of delayed payment of duty along with interest, a show cause notice was issued for breach of Rule 8(3) of the Central Excise Rules and a proposal was made as to why the penalty under Rule 25 equivalent to the amount of the duty be not imposed by the assessing officer. On an appeal being filed before the Commissioner (Appeals), the penalty under Rule 25 was reduced to Rs. 2,00,000/-.

For quashing of the imposition of penalty, further appeal was filed before the Tribunal and the Tribunal after evaluating the matter found that imposition of penalty under Rule 25 of the Central Excise Rules was not appropriate as mala fide intention in the matter of delayed payment of duty was not made out.

However, as the statutory period for payment of duty was not complied with, it was held by the Tribunal that the general penalty under Rule 27 of the Central Excise Rules, 2002 could be imposed and accordingly, the Tribunal allowed the appeal and imposed a general penalty under Rule 27 of the Central Excise Rules to the extent of Rs. 2,000/- per default.

Even though, Shri Bhatt tried to emphasize that the show-cause notice was under Rule 25 and without hearing the petitioner, imposition of penalty under Rule 27 was not permissible. The fact remains that after the show-cause notice was issued by the Assistant Commissioner, the Assistant Commissioner passed an order on 17-3-2008 Annexure A-2 and imposed a penalty of Rs. 7,42,216/- under sub-rule (1)(a) of Rule 25.

It is therefore clear that the competent authority which issued the show-cause notice had imposed the punishment under Rule 25. On an appeal being filed before the Commissioner (Appeals), the Commissioner (Appeals) by order Annexure A-4 on 31st July, 2008 allowed the appeal in part and reduced the penalty from Rs. 7,42,216/- to Rs. 2,00,000/-.

Again, under Rule 25 of the Central Excise Rules, 2002, now when the matter was taken at the instance of the petitioner in an appeal filed before the Tribunal, the Tribunal has infact allowed the entire appeal of the petitioner and the penalty imposed under Rule 25 has been quashed. However, admittedly, as there was delay in deposit of the duty, the general penalty clause under Rule 27 is enforced and a general penalty of Rs. 2,000/- was imposed for each default. In doing so, no error has been committed by the Tribunal which warrants interference now in these proceedings.

During the course of hearing of this appeal, we posed a question to learned counsel for the appellant and asked him to demonstrate before us as to how and in what manner, imposition of penalty even under Rule 27 is not permissible and how prejudice is caused to him in the matter of imposing penalty under Rule 27 by the Tribunal.

Neither, any prejudice caused was demonstrated or established before us nor is any illegality pointed in the matter of imposing general penalty under Rule 27. Admittedly, the appellant had committed a delay in deposit of the duty and if the duty was not deposited within the stipulated period, the general penalty under Rule 27 could be imposed and in doing so, as no illegality is committed and no breach of statutory provision is established, that being so, we see no reason to interfere into the matter. The appeal is therefore dismissed as no question of law arises for consideration in this appeal.