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2016 (10) TMI 956 - ALLAHABAD HIGH COURTDelayed payment of central excise duty under Section 3A of the Central Excise Act, 1944 - Demand of Interest and penalty - Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994 - violative of Articles 14 and 19(1)(g) of the Constitution - Whether, mandatory quantum of penalty equal to the amount of duty prescribed under Rule 96ZO (3) (ii) of erstwhile Central Excise Rules, 1944, can be reduced? - Section 35-G of Central Excise Act, 1944 - Held that: - Reliance placed on the decision of case of Shree Bhagwati Steel Rolling Mills vs. Commissioner of Central Excise [2015 (11) TMI 1172 - SUPREME COURT] where it was held that when contrasted with the provisions of the Central Excise Act itself, the penalty provisions contained in Rules 96ZO, 96ZP and 96ZQ are both arbitrary and excessive. A penalty can only be levied by authority of statutory law, and Section 37 of the Act, as has been extracted above does not expressly authorise the Government to levy penalty higher than ₹ 5,000/-. Insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Article 14, 19(1)(g) and are ultra vires the Central Excise Act. The sole question of law in this appeal is answered against the department and in favor of the assessee - appeal dismissed.
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