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Commissioner of Central Excise Pune - II Versus Natraj Textile Processors P. Ltd

2016 (4) TMI 104 - CESTAT MUMBAI

Penalty under the provisions of Rule 96ZQ(5)(ii) of Central Excise Rules, 1944 - non payment of Central Excise duty as determined under annual capacity of production - Held that:- We find that the issue is no more res integra as Hon’ble High Court of Gujarat in the case of Krishna Processors vs. Union of India 2012 (2012 (11) TMI 954 - GUJARAT HIGH COURT ) struck down the provisions of Rule 96ZQ as ultra vires. - Hon’ble High Court of Bombay in the case of Commissioner of Central Excise vs. .....

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B - Dated:- 2-12-2015 - SHRI MV RAVINDRAN, MEMBER (JUDICIAL) AND SHRI CJ MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri V.K. Shastri, Asstt. Commissioner (AR) For the Respondent : Shri R.B. Pardeshi, Advocate ORDER PER: M.V. RAVINDRAN: These two appeals are filed by the Order-in-Appeal No: PII/BKS/571-572/2004 dated 09/12/2004 passed by the Commissioner of Central Excise (Appeals), Pune II. 2. Heard both the sides and perused the records. 3. Revenue is aggrieved by the impugned order on th .....

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ndia 2012 (280) ELT 186 (Guj.) struck down the provisions of Rule 96ZQ as ultra vires. The relevant paragraph where the ratio has been carved out by their Lordships is at paragraph 12, which respectfully is reproduced. 12. Mr. Y. N. Ravani, learned Senior Standing Counsel appearing on behalf of the respondents in Special Civil Application No. 1984 of 2002 reiterated the submissions advanced by Mr. Darshan Parikh. It was further submitted that the contention as regards lapsing of the above referr .....

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n, it was pointed out that the court had interfered only with the penalty part of the order by observing that the remaining portions are not interfered with, for the simple reason that the petitioners have preferred appeals for challenging the other portions of the orders levying duty and interest. 12.1 The learned counsel invited attention to the decision of the Supreme Court in the case of Union of India v. Krishna Processors (supra) to submit that the Supreme Court has remitted the matter for .....

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mposed under Rule 96ZQ(5)(ii) of the Rules. Rule 96ZQ is part of the Central Excise Rules. The Central Excise Rules are still in existence and are framed in exercise of powers under Section 37 and not Section 3A of the Act. Accordingly the power of enactment prescribed under Section 37 of the Central Excise Act, has its independent existence irrespective of Section 3A of the Act. 12.2 On the question of validity of Rule 96ZQ of the Rules, Mr. Ravani invited attention to the decision of the Supre .....

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t necessary. Reliance was also placed upon the decision of the Supreme Court in Commissioner of Income-tax, Delhi v. Atul Mohan Bindal, (2009) 9 SCC 589, wherein it has been held that the decision in Dharamendra Textile (supra) must be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the Section, once the Section is applicable in a case the authority concerned would have no discretion in quantifying .....

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on manufacture. It was submitted that under Section 3 of the Act, the assessee does not know what will be the liability in advance whereas in case of Section 3A of the Act, the assessee knows his liability well in advance. Rule 96ZQ has been framed keeping in mind this aspect. According to the learned counsel, Rule 96ZQ applies uniformly to those to whom Section 3A applies, viz., independent textile processors who are a class by themselves. Hence, there is no discrimination on the basis of such .....

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rescribed period is known to the assessee. It was submitted that in the decisions relied upon by the petitioners in the context of tax liability, the court found that in the absence of valid classification, the provision is ultra vires. It was submitted that Section 3A of the Act is based upon a valid classification and imposition of penalty cannot be compared to liability to tax as imposition of penalty is different. The object is that the defaulter and the assessee cannot be put in the same cl .....

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t appears that 36% interest per annum is imposed as compensatory measure as the Revenue suffered loss on account of non-payment of revenue. At the same time, with a view to see that there is deterrent effect on the tax payers, it is also thought fit to impose penalty so that the amount which the Revenue is entitled to collect is paid by an assessee in time and the Government is not required to face any hardship. If the amount is not paid, it becomes difficult for the Government to run the admini .....

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ering the validity of a statutory provision the presumption is always in favour of its constitutionality. It was submitted that Section 3A of the Act was brought on the statute book with an intention to collect tax on production basis and to collect the same within time. The said provision was enacted in the interest of the revenue. It was intended to avoid a situation of evasion of tax and to provide timely collection of duty. Both purposes can be achieved by imposing penalty to create deterren .....

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ch sub-section is required to be applied independently. It was submitted that the sub-section (1) prevails over the subsequent sub-sections. Under sub-section (1) of Section 37 the Central Government is empowered to make rules to carry into effect the purposes of this Act and as such can frame any rule for this purpose. According to the learned counsel the clauses contained in sub-section (2) of Section 37 are enumerative and not exhaustive. It was submitted that sub-section (3) of Section 37 is .....

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3A of the Act and Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is a separate scheme from the normal scheme for collection of central excise duty on goods manufactured in the country. This is a comprehensive scheme in itself and general provisions in the Act and the Rules are excluded. It was submitted that the scheme is a unique scheme not comparable with the scheme of Section 3 and that the aspect of penalty under Section 3 and Section 3A of the Act cannot be compared. .....

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