2001 (9) TMI 899 - AT - Central Excise

Summary

Issues:
- Imposition of penalty under Rule 96ZQ(5)(ii) by the Commissioner without questioning the liability to duty or interest.
- Provisional determination of duty under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998.
- Financial hardship as a reason for non-payment of duty.
- Reduction of duty and penalty based on an order granting abatement.

Analysis:
1. The primary issue in the judgment revolves around the imposition of penalties by the Commissioner without any challenge to the liability for duty or interest. The appellant, a textile processor, faced penalties for non-payment of duty during specific periods. The appellant's counsel confirmed that the appeal was solely limited to contesting the imposition of penalties, not the liability for duty or interest.

2. The determination of duty under the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998, played a crucial role in the case. The penalties were imposed due to the appellant's failure to pay duty during certain periods. The appellant cited financial hardship as a reason for the non-payment, but the Tribunal found this explanation insufficient, stating that financial constraints do not justify non-payment of duty when the appellant had the means to operate the factory and purchase necessary materials.

3. The judgment compared the current case with a previous case involving provisional duty determination. It was highlighted that in cases where duty is provisionally determined, penalties may not be imposed for non-payment. However, in the present situation, the duty was determined according to the rules in place at the time, and failure to pay duty by the prescribed date resulted in penalties equivalent to the unpaid duty.

4. An additional issue arose regarding a reduction in duty and penalty based on an order granting abatement for a specific period. The Commissioner had granted abatement of duty for a particular timeframe, leading to a reduction in the duty payable by the appellant. Consequently, the penalty imposed was also reduced accordingly. The Tribunal remanded the matter to the Assistant Commissioner for determining the final duty and penalty amounts based on the abatement order's conditions.

5. Ultimately, one of the appeals was dismissed, affirming the penalties imposed by the Commissioner. The judgment emphasized the importance of timely duty payment, even in cases of financial hardship, and upheld the penalties in light of the appellant's failure to meet their duty obligations as per the applicable rules and regulations.