Case Law

Penalty of Rs 5,000 if duty not paid within 30 days and still goods cleared

As per rule 8(3) of Central Excise Rules, if duty is not paid within 30 days, duty is required to be paid before clearance for subsequent clearance. If despite such restrictions, assessee clears goods without payment of duty and consequences and penalties as applicable for removal of goods without payment of duty will follow [Rule 8(3A)].

Really, goods cannot be confiscated as these have already been cleared. Further, penalty cannot be imposed under rule 25, if delay was due to reasons beyond his control (i.e. when there was no intention to evade duty). Maximum penalty of Rs 5,000 can be imposed under rule 27 as per case law discussed below.

In CCE v. Saurashtra Cement (2010) 260 ELT 71 (Guj HC DB), it was observed that penalty is payable under Central Excise Rules. It was held that there is no contravention of any of clause of rule 25. Rule 25 is subject to section 11AC of CEA. Penalty cannot be imposed if delayed payment was due to reasons beyond his control. Thus, penalty can be imposed only under rule 27 of Central Excise Rules (which is Rs 5,000) [upholding Tribunal order in (2008) 225 ELT 395 (CESTAT)].