No penalty imposable if duty along with interest paid before issuance of show cause notice.

PJ/Case Law/2013-14/1684

Case:- COMMISSIONER OF CUSTOMS & CENTRAL EXCISE VERSUS SARU SMELTING PVT. LTD.

Citation:-2013 (292) E.L.T. 330 (All.)

Brief facts:- The facts of this case are that penalty was imposed on the respondent under Rule 21 of the Central Excise Rules, 2002 on the allegation that respondent failed to discharge duty liability under Rule 8 of the Central Excise Rules, 2002. The respondent however before the issuance of show cause notice on 27th February, 2004, has deposited the duty along with interest. A show cause notice was issued and the Assistant Commissioner, Central Excise by his order dated 22nd March, 2005 has confirmed the demand of Rs. 85,817/- as short-paid by the party. However, since the amount of duty and interest was deposited, the demand was confirmed and penalty of Rs. 50,000/- under Rule 8 of the Central Excise Rules was imposed.The appeal was filed against the said order before the Commissioner (Appeals), Customs & Central Excise. The appellate authority observed that clause (a) of Rule 25(1) does not specify the requirement of any intent to evade payment of duty, hence the penalty is leviable. In the present case appeal was taken to the Tribunal by the respondent which has been allowed by order dated 14th March, 2008.

Appellant’s Contention:- The appellant submitted that since duty was short-paid, the respondent was liable for penalty which has rightly been imposed. He submitted that Tribunal was not legally justified in deleting the penalty which was admittedly paid belatedly under Rule 8(1) of the Rules.

Reasoning of Judgment:-After considering the submissions and records, it is not disputed between the parties that duty along with interest was paid they the respondent before issuance of the show cause notice. The duty short-paid, was paid along with the interest and it was not a case of intend to evade the payment to evade the payment of duty. The Tribunal has further noticed that adjudicating authority cannot invite penalty under Rule 25 of the rules in the facts of the present case. Cogent reasons have been given by the Tribunal for deleting the Penalty. We are of the view that the order of the Tribunal is legally justified in deleting the penalty and no error has been committed in deleting penalty by the Tribunal. Appeal being concluded by findings of facts, no substantial question of law arises for consideration.

Decision:- Appeal dismissed.

Comment:- The crux of this case is that if the assessee makes payment of duty along with interest before issuance of Show cause notice then assessee is not liable for payment of penalty.

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PJ/Case Law/2013-14/1684

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