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2013 (10) TMI 259 - AT - Central ExciseCompounded Levy Scheme under Rule 96ZO of the Central Excise Rules - Penalty - The assesses were manufacturers of non-alloy steel ingots and billets chargeable to Central Excise duty under sub-heading 7206.90 of the Central Excise Tariff - Held that:- The provision to the extent of providing for mandatory minimum penalty without any mens rea and without any element of discretion was excessive and unreasonable restriction on fundamental rights and was arbitrary - exercise of such power by way of subordinate legislation was not permissible when rule making authority for levying penalty was limited to default “with intent to evade duty” - The writ petitions of the assessees were allowed and impugned provisions in Rules 96(ZO), (ZP) and (ZQ) permitting minimum penalty for delay in payment, without any discretion and without having regard to extent and circumstances for delay are held to be ultra vires the Act and the Constitution - In CWP No. 8555 of 2010, penalty had been sustained by the Tribunal to the extent of 100% which will stand quashed without prejudice to any fresh order being passed in accordance with - Krishna Processors v. Union of India [2012 (11) TMI 954 - GUJARAT HIGH COURT ]. The provision for minimum mandatory penalty equal to the amount of duty even for slightest bona fide delay without any element of discretion is beyond the purpose of legislation - The object of the rule was to safeguard the revenue against loss, if any - The penalty had been provided in addition to interest - Mere fact that without mens rea, one can be punished or a penalty could be imposed was not a blanket power without providing for any justification - In the Indian Constitutional scheme, power of legislature was circumscribed by fundamental rights - Judicial review of legislation was permissible on the ground of excessive restriction as against reasonable restriction which is also described as proportionality test - imposition of penalty equal to the outstanding duty liability was not sustainable - since there was delay in discharge of duty liability by the due date and the same by itself would attract penalty, imposition of some penalty would be required - Accordingly, the penalty on the appellant was reduced – Partial appeal allowed.
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