TMI Blog2016 (10) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory law, and Section 37 of the Act, does not expressly authorize the Government to levy penalty higher than ₹ 5,000/-. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make Rules 96ZO, 96ZP and 96ZQ without authority of law. The Rules of 96ZO, 96ZP and 96ZQ striked down insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Articles 14, 19(1)(g) and are ultra vires the Central Excise Act - imposition of penalty and interest not sustainable in law - appeal disposed off - decided against appellant. - E/Misc/20127, 20128/2016, E/835 & 836, 1019/2002-DB, E/835, 836,1019/2002, E/94/2003 - Final Order No. 20959-20962/ 2016 - Dated:- 7-10-2016 - Shri S. S Garg, Judicial Member And Shri Ashok K. Arya, Technical Member Mr. A.S. Monappa, Adv For the Appellant Mr. J. Harish, A.R. For the Respondent ORDER Per S. S. Garg The applicant has filed miscellaneous application stating that the appeals have been filed by M/s Bhuwalka Steel Industries Ltd against order- in-appeal dated 09.04.2002 passed by Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the mill during the financial year 19967-97. The appellant were issued a show-cause notice proposing to demand total differential duty amounting to ₹ 2,12,40,994/- for the period from September 97 to March 2000. Based on the annual capacity of production determined by the Commissioner of Central Excise Bangalore and in some of the show-cause notices even the penalty was also proposed along with interest. Appellant filed a reply to the show-cause notice, controverted the allegations in the show-cause notice and the Assistant Commissioner vide his order dated 15.01.2001 confirmed the demand for duty to the extent of ₹ 1,84,32,355/- and interest at the appropriate rate. However the imposition of penalty was kept in abeyance till the disposal of the civil appeals by the Hon ble Supreme Court. Aggrieved by the said order, appellant filed appeal before the Commissioner who rejected the appeal of the appellant and confirmed the order-in-original. Aggrieved by the said order, the appellants are before us. 4. Heard both the parties and perused the records. In all cases the issue relates to the demand of differential duty under the compounded levy scheme introduced in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the Commissioner has fixed the annual production capacity by invoking provisions of Rule 5 of the Hot Re-rolling Mills Capacity Determination Rules 1997 which is reproduced herein below: In case, the Annual capacity determined by formula in sub-rule 3 of Rule 3 in respect of a mill, is less than the actual production of the mill during the financial year 1996-97, then the annual capacity so determined shall be deemed to be equal to the actual production of the mill during the financial year 1996-97. He further submitted that the appellant had paid duty on the annual production capacity determined as per the formula provided in Rule 3(3) of the Hot Re-rolling Annual Capacity Determination Rules 1997. Hence the demand for differential duty has arisen in all the appeals. He further submitted that the appellant had challenged the constitutional validity of Rule 5 of Hot Re-rolling Steel Mills Annual Capacity Determination Rules 1997 and the determination orders before the Hon ble High Court of Karnataka in Writ Petition No. 6682/2002. The Constitutional validity of the said Rule 5 was upheld by the learned single judge of the Hon ble High Court of Karnataka. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced herein below: 26. If we look at Rule 5 from another angle, we are further satisfied about the view taken by us. Rule provides that if the production during the year 1996-97 was more than the production determined by the formula in Sub-rule (3) of Rule 3 of the Rules, then that has to be taken as the annual capacity for the financial year 1997-98 and the subsequent years. This rule, it seems, was introduced keeping in view the fact that without there being any change in the plant and machinery, including man power, there should not be any reason why factory should have more production in 1996-97 than 1997-98. In other words, without there being any change in the plant and machinery and the other infrastructure including man power, if class A manufacturer in 1996-97 could produce 150 bars/rods in 1997-98 unless there is a reason and the evidence in support thereof and if there is any such reason or evidence the manufacturer can take recourse to sub-section (4) of Section 3A of the Act. It was also to check mischief, if any, on the part of manufacturer to show or go for lower/less production to gain an advantage of the scheme. We find that the classification have a ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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