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Commissioner of Central Excise Commissionerate, Ludhiana Versus M/s Midland Alloys & Steel Pvt. Ltd., Ludhiana

2015 (12) TMI 736 - PUNJAB & HARYANA HIGH COURT

Compounded levy scheme - Penalty under Rule 96ZO - violation of the provisions of erstwhile Rule 96ZO of the Central Excise Rules, 1944 - Held that:- Issue raised in this appeal stands concluded by the decision of this Court in [M/s Jai Bharat Maruti Ltd. v. Commissioner of Central Excise Delhi-III, Vanijya Nikunj, Udyog Vihar, Phase-Gurgaon (Haryana)] [2013 (10) TMI 355 - PUNJAB & HARYANA HIGH COURT] [Commissioner of Central Excise, Chandigarh-II v. M/s Pee Iron & Steel Co. (P) Ltd., Derabassi] .....

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any element of discretion as excessive and unreasonable restriction on fundamental rights being arbitrary and were accordingly declared to be ultra vires the Act and the Constitution - no substantial question of law arises in this appeal - Decided against Revenue. - CEA No. 55 of 2015 (O&M) - Dated:- 28-11-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ PRESENT: None. ORDER AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the revenue under Section 35G of the Central Excise Act, .....

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f delay, could be held to be ultra vires of the Act and the Constitution of India? ii) Whether mandatory penalty equal to amount of duty on the assessee in case of violation of the provisions of erstwhile Rule 96ZO of the Central Excise Rules, 1944 could be waived or reduced in the discretion of the adjudicating authority having regard to extent and circumstances of delay in payment of duty? 2. A few facts necessary for adjudication of the present appeal as narrated therein may be noticed. The a .....

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last day of each month, for having capacity of 2.00 Mts. of their Induction Furnace installed in the factory premises. They failed to discharge the duty liability amounting to ₹ 13,33,131/- ₹ 18,96,331/- and ₹ 15,96,107/-, respectively, during the period April, 1998 to September, 1998, October, 1998 to March, 1999 and April, 1999 to September, 1999. Accordingly, three show cause notices dated 26.10.1999, 13.10.1999 and 19.11.1999, respectively were issued to the respondent for .....

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required amount and the appeal was dismissed in default. Against the order dated 22.1.2004, the assessee filed an appeal before this Court and this Court vide order dated 1.11.2004 remanded the matter back to the Commissioner (Appeals). Thereafter, the Commissioner (Appeals) vide order dated 30.3.2006 reduced the penalty to ₹ 25,00,000/-. Still dissatisfied, the assessee filed an appeal before the Tribunal against the imposition of penalty of ₹ 25,00,000/-. The Tribunal vide order da .....

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nion of India, 2010(260) ELT 343 (P&H). Hence, the present appeal. 3. Though none has put in appearance on behalf of the appellant-revenue, however, from a perusal of the appeal, we find that the Tribunal had relied upon the decision of this Court in Bansal Alloys & Metals Pvt. Ltd.'s case (supra). The issue was with regard to levy of penalty which was reduced by the Commissioner (Appeals). 4. The issue raised in this appeal stands concluded by the decision of this Court in CEA No. 4 .....

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vt. Ltd's case (supra) while deciding the question of vires of Rules 96ZO(3), 96ZP and 96ZQ of the Rules held the said provisions to the extent of providing for mandatory minimum penalty without mens rea and without any element of discretion as excessive and unreasonable restriction on fundamental rights being arbitrary and were accordingly declared to be ultra vires the Act and the Constitution. It was recorded as under:- 15. Applying the above principles to the present situation, the provi .....

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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 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 .....

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een sustained by the Tribunal to the extent of 100% which will stand quashed without prejudice to any fresh order being passed in accordance with law. It is made clear that if penalty has attained finality as in CWP No.18099 of 2009 upto this Court, this order will not affect the finality of such order. The appeals filed by the revenue against the orders of the Tribunal sustaining penalty proportionate to the default will stand dismissed. 5. The Supreme Court in Civil Appeal No. 4280 of 2007 (M/ .....

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Section(4) is even more telling. Even in cases where there is a clandestine removal of excisable goods, and cases where the assessee intends to evade payment of duty, the assessee is liable to a penalty not exceeding the duty leviable on such goods or ₹ 10,000/- whichever is greater. It will be noticed that the Act is very circumspect in laying down penalty provisions. Penalties in given circumstances extend only to ₹ 5,000/- and ₹ 10,000/- which are small amounts. Further, eve .....

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