Judgment:
1. The appellant filed this appeal against the imposition of penalty of Rs. 10.00 lakhs under Rule 25 of Central Excise Rules, 2002.
2. The relevant facts of the case in brief are that the appellants are engaged in the manufacture of cotton yarn. The appellant had defaulted for discharging duty for the month of August, 2003 to December, 2003 and for the month of March, 2004, and subsequently discharged duty along with interest under Rule 8(3) of the Central Excise Rules, 2002. The Ld. Advocate submits that the appellant was facing acute financial crisis as well as the appellant company was under the BIFR during the material period and therefore, there was a delay in payment of duty. He submits that they have paid duty with interest before the issue of Show cause notice when the appellant company was under BIFR. Therefore, penalty under Rule 25 of CER, 2002 is not sustainable. He relies upon the decision of the Honble High Court of Andhra Pradesh in the case of CCE, Guntur Vs. Andhra Cements Ltd. 2007 (216) ELT 362 (A.P), to this effect.
3. On the other hand, the Ld. AR for the Revenue submits that Rule 8 (3) as it is stood during the material time clearly provides for delay in discharging duty, consequent penalty will arise. He submits that there is ample number of decisions the Tribunal held that penalty would be imposable for defaulting payment of duty under Rule 8(3).
4. After hearing both the sides and on perusal of the record, I find that the Honble Andhra Pradesh High Court in the case of Andhra Cements Ltd. (supra), held as under:
"6. In the present case, there is a finding of the Tribunal that the circumstances were beyond the control of the respondent-company as the matter was pending before BIFR, and as such, the amounts could not be deposited by the respondent-company within time and as soon as it was in a position to make the payment, the respondent-company made the payment not only of the duty, but also of the interest calculated under Rule 8(3) of the Rules. Therefore, we have no doubt in our mind that the Tribunal has correctly interpreted Rule 25 of the Rules and the penalty could not be imposed on the respondent-company."
5. In the present case, there is no dispute that the appellant was under BIFR and they have failed to pay duty within the stipulated period due to the financial crisis. It is noted that the appellants paid the duty with interest before issue of show cause notice. Respectfully following the decision of the Honble Andhra Pradesh High Court of in the case of Ahdhra Cements Ltd., the impugned order is set aside and the appeal is allowed with consequential relief.