TMI Blog2019 (7) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Rule 96ZO as well as other rules which have now declared as ultra vires by the Hon'ble Apex Court in Shree Bhagwati Steel Rolling Mills - the levy or upholding of interest under Rule 96ZO of the Central Excise Act is an exercise in excess of jurisdiction. Similarly, we are also satisfied that the levy or upholding of penalty in excess of ₹ 10,000/- is also an exercise in excess of jurisdiction. To that extent, there is no necessity for relegating the Petitioner to avail an alternate remedy of appeal to the CESTAT. The impugned order to the extent it levies interest and penalty (in excess of ₹ 10,000/-) is therefore set aside. The impugned orders are modified to the aforesaid extent only - In so far as the rest of the issues are concerned, the impugned order is not interfered with but liberty is granted to the Petitioner to avail the alternate remedy by way of an appeal to the CESTAT - Appeal allowed in part. - WRIT PETITION NO. 485 OF 2019 - - - Dated:- 16-7-2019 - M. S. SONAK NUTAN D. SARDESSAI, JJ. Mr. V. M. Doiphode with Mr. Sarvesh Dinker Kamat Malyeker, Advocates for the Petitioner. Ms. Asha A. Desai, Senior Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.F.No.SCN/AC(D)30/98-CX.ADJ dtd.30.12.98 is confirmed. In addition, I impose penalty under Rule 96ZO(3) of the Rules on the said assessee, amounting to ₹ 13,80,000/- ( Rupees Thirteen Lakhs Eighty Thousand Only ) in respect of this SCN. (e) Duty demand of ₹ 9,20,000/- (Rupees Nine Lakhs Twenty Thousand Only) raised vide SCN No.F.No.SCN/AC(DIV)17/99-CX. Adj/dtd.28.06.99 is confirmed. In addition, I impose penalty under Rule 96ZO(3) of the Rules on the said assessee, amounting to of ₹ 9,20,000/- ( Rupees Nine Lakhs Twenty Thousand Only ) in respect of this SCN. (f) Duty demand of ₹ 12,70,000/- (Rupees Twelve Lakhs Seventy Thousand Only) raised vide SCN No.F.No.SCN/DC(D)-41/99-CX.Div.Adj/dtd 21.10.1999 is confirmed. In addition, I impose penalty under Rule 96ZO(3) of the Rules on the said assessee, amounting to ₹ 12,70,000/- ( Rupees Twelve Lakhs Seventy Thousand Only ) in respect of this SCN. (g) Duty demand of ₹ 40,96,774/- (Rupees Forty Lakhs Ninety Six Thousand Seven Hundred and Seventy Four Only) raised vide SCN No.F.No.SCN/DC(D)-21/2000- CX.Div.Adj/dtd.27.03.2000 is confirmed. In addition, I impose penalty und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention amounts to failure to exercise jurisdiction and consequently, there can be no bar of entertainment of the present petition. 7. Mr. Doiphode further submits that the impugned order has confirmed the direction for payment of interest as well as the penalty by ignoring vital circumstance that the rules under which such penalty and interest came to be levied have already been declared as ultra vires by the Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills Vs Commissioner of Central Excise 2015 (326) E.L.T.209 (S.C.). He submits that the imposition or even upholding levy of interest and penalty in the circumstance is an exercise, clearly in excess of jurisdiction. He submits that this is an additional ground as to why this Court should entertain the present petition rather than relegate the Petitioner to the alternate remedy available under the said Act. 8. With the assistance of the learned counsel for the parties, we have perused the impugned order as well as the limited material placed by the parties. According to us, it cannot be said that the contention of the Petitioner with regard to the determination of annual capacity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the duty leviable. In a given case, therefore, even where there is willful intent to evade duty and the duty amount comes to say a crore of rupees, the authorities can in the facts and circumstances of a given case, levy a penalty of say ₹ 25,00,000/- or ₹ 50,00,000/-. This being the position, it is clear that when contrasted with the provisions of the Central Excise Act itself, the penalty provisions contained in Rules 96ZO, 96ZP and 96 ZQ are both arbitrary and excessive. 39. A penalty can only be levied by authority of statutory law, and Section 37 of the Act, as has been extracted above 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. We, therefore, uphold the contention of the assessees in all these cases and strike down Rules 96ZO, 96ZP and 96ZQ insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Article 14, 19(1)(g) and are ultra vires the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. To that extent, there is no necessity for relegating the Petitioner to avail an alternate remedy of appeal to the CESTAT. The impugned order to the extent it levies interest and penalty (in excess of ₹ 10,000/-) is therefore set aside. The impugned order as well as the order in original to stand modified accordingly. 15. We, however, make it clear that we have not examined the issue as to whether this was a fit case for levy of penalty even upto ₹ 10,000/- or not. We have only interfered with the quantum of penalty on the ground that no penalty in excess of ₹ 10,000/- could have been imposed by virtue of Rule 96ZO being declared as invalid by the Hon'ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills (supra). Therefore, if the Petitioner still has any grievance about the levy of penalty to the extent of ₹ 10,000/-, the Petitioner, is at liberty to agitate this issue by way of appeal in case, the Petitioner chooses to institute such an appeal. 16. Accordingly, the impugned orders are modified to the aforesaid extent only. In so far as the rest of the issues are concerned, the impugned order is not interfered with but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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