CESTAT Quashes Penalty u/r 25 of Central Excise Rules imposed on Manufacture of Textile Machinery on ground of Absence of Malafide Intention [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the penalty under rule 25 of the Central Excise Rules,2002 imposed on the manufacture of textile machinery on the ground of absence of malafide intention. 

Ambica Engineering Works, the appellant assessee engaged in the manufacture of textile machinery falling under Chapter 84 of Central Excise Act, 1984 and they are availing CENVAT credit under CENVAT Credit Rules, 2004, and utilizing the same for payment of central excise duty on the goods cleared by them. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand and for the imposition of penalty under rule 25 of the Central Excise Rules. 

S Suriyanarayanan, the counsel for the assessee contended that there was no malafide intention to evade duty in the facts of the present case as the issue involved was of interpretation of the Notification and there was no suppression of fact on the part of the assessee. 

Also submitted that demand was for the normal period and the penalty under Rule 25 of the Central Excise Rules was not sustainable and liable to be deleted. 

P. Ganesan, the counsel for the department relied on the decisions made by the lower authorities and contended that the imposition of penalty raised by the department was as per the law and liable to be sustained. 

The Bench observed that there was no malafide intention on the part of the assessee and in the present case also the assessee cannot be liable for penalty under Rule 25 of the Central Excise Rules. 

The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) quashed the penalty imposed under rule 25 of the Central Excise Rules against the assessee. 

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