2003 (9) TMI 580 - AT - Central Excise

Summary

Issues:
1. Duty and penalty waiver applications.
2. Validity of duty demand and penalties under compounded levy scheme.
3. Ultra vires of Rule 3 of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1997.
4. Setting aside impugned order and allowing appeals.

Analysis:
1. The judgment pertains to the consideration of applications for waiver of pre-deposit of duty and penalty due to short payment or delay in payment. The Tribunal found that the issue in dispute had been settled by a judgment of the Madras High Court in a related case. Consequently, the Tribunal decided to proceed with the appeals themselves.

2. The duty demand and penalties in question arose under the compounded levy scheme governed by the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1997, and Rule 96ZQ(5) of the Central Excise Rules, 1944. The Tribunal observed that the High Court had declared Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1997, and the notification issued thereunder as ultra vires of Section 3A of the Central Excise Act, 1944. As a result, the demand and penalties linked to Rule 3 were deemed unsustainable. Therefore, the impugned order of the Commissioner (Appeals) was set aside, and the appeals were allowed, granting the department the liberty to proceed under Section 3 of the Central Excise Act, 1944, in accordance with the High Court's directive.

3. The Tribunal's decision was based on the legal position established by the High Court's ruling regarding the invalidity of Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1997. By following the precedent set by the High Court, the Tribunal concluded that the demand and penalties under the compounded levy scheme could not be sustained due to the ultra vires nature of Rule 3. This led to the setting aside of the impugned order and the allowance of the appeals filed by the appellants.

4. In conclusion, the Tribunal's judgment revolved around the issues of duty and penalty waiver applications, the validity of demands and penalties under the compounded levy scheme, the ultra vires nature of Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1997, and the subsequent setting aside of the impugned order. The decision provided clarity on the legal implications of the High Court's ruling and directed the department on further actions to be taken in accordance with the law.