TMI Blog2014 (10) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... hts. Judicial review of legislation is permissible on the ground of excessive restriction as against reasonable restriction which is also described as proportionality test. impugned provision to the extent of providing for mandatory minimum penalty without any mens rea and without any element of discretion is excessive and unreasonable restriction on fundamental rights and is arbitrary. Moreover, exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default "with intent to evade duty" - no substantial question of law arises - Following decision of Bansal Alloys & Metals (P.) Ltd.'s case [2010 (11) TMI 83 - PUNJAB & HARYANA HIGH COURT] - Decided against Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Rules, 1944 before the same were omitted, notwithstanding the omission of Section 3A w.e.f. 11.05.2001? 2. Briefly stated, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee is engaged in the business of manufacture of Non-alloy Steel Ingots. It was working under the compounded levy scheme under Section 3A of the Act and was required to pay monthly duty liability in two equal installments, 1st installment latest by 15th of the month and the 2nd installment latest by the last day of the month in terms of Rule 96ZO(3) of the Central Excise Rules, 1944 (in short the Rules ). The assessee failed to discharge its duty liability to the tune of ₹ 1,00,00,000/- within the prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equal to the amount of duty even for slightest bonafide delay without any element of discretion is beyond the purpose of legislation. The object of the rule is to safeguard the revenue against loss, if any. The penalty has been provided in addition to interest. Mere fact that without mens rea, an can be punished or a penalty could be imposed is not a blanket power without providing for any justification. In the Indian Constitutional scheme, power of legislature is circumscribed by fundamental rights. Judicial review of legislation is permissible on the ground of excessive restriction as against reasonable restriction which is also described as proportionality test. Conclusion 16. For the above reasons, we hold that the impugned provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal Alloys and Metals (P.) Ltd. v. Union of India (supra) wherein the court has held that 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 is to safeguard the revenue against loss, if any. The penalty has been provided in addition to interest. Mere fact that without mens rea, an assessee can be punished or a penalty could be imposed is not a blanket power without providing for any justification. The court, accordingly, held the provisions of Rules 96ZO, ZP and ZQ permitting penalty for delay in payment, without any discretion and without having regard to the extent and circumstances for del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary. Moreover, exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default with intent to evade duty . 8. We are in agreement with the aforesaid judgment. We feel that when Section 37, which is the rule making power, is clear that penalty can be imposed only when the assessee is guilty of intending to evade the payment of duty, the penalty cannot be imposed without such intention. Furthermore, even when intention may be there, the penalty must be reasonable and cannot, in all cases, be fixed at 100% of the excise leviable. Each case must be decided on its own facts and circumstances. There may be cases where the delay is only of a day or two and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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