2003 (1) TMI 473 - AT - Central Excise

Summary

Issues:
Appeal against order of Commissioner of Central Excise - Interest levied on belated duty payment for second fortnight of December 1998 - Penalty imposed under Rule 96ZP(3) - Discretion in penalty imposition - Appeal for leniency in penalty - Appellants willing to pay interest - Minimum penalty prescribed under Rule 96ZP(3.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Chennai concerned the imposition of interest and penalty by the Commissioner of Central Excise on the appellants for belated duty payment for the second fortnight of December 1998. The appellants, engaged in manufacturing iron and steel products under the Compounded Levy Scheme, had to pay duty fortnightly. The dispute arose when they paid the duty for the second fortnight on 2-1-1999 instead of by 31-12-98, citing bank holidays as the reason for the delay. The Commissioner demanded interest and imposed a penalty equal to the duty paid, as mandated by Rule 96ZP(3) of the Central Excise Rules, 1944.

The appellants contended that the penalty imposed was too severe, given the circumstances of the delay being explained to the satisfaction of the Commissioner. They argued that there was discretion under Rule 96ZP(3) for penalty imposition, which was not reasonably exercised in their case. The appellants expressed willingness to pay the interest but sought a lenient approach regarding the penalty. The Departmental Representative left the penalty matter to the discretion of the Bench.

Upon careful examination, the Tribunal found the penalty imposed to be excessive considering the two-day delay in duty payment, both days being bank holidays. Acknowledging the appellants' undertaking to pay the interest, the Tribunal decided to call for the minimum penalty prescribed under Rule 96ZP(3), citing the decision in the case of J.K. Processors v. CC, Mumbai. Consequently, the Tribunal disposed of the appeal, directing the appellants to pay the minimum penalty of Rs. 5,000 under Rule 96ZP(3) along with the confirmed interest, modifying the impugned order accordingly.