2004 (4) TMI 450 - AT - Central Excise

Summary

Issues:
Imposition of personal penalty under Rule 96ZQ(5) (ii) for failure to discharge duty liability within specified timeframes.

Analysis:
The appellants were aggrieved by the imposition of a personal penalty of Rs. 8,75,000 under Rule 96ZQ(5) (ii) for failing to discharge their duty liability as required. The lower authorities upheld the penalty imposed by the original authority, leading to the appeal. The appellant's representative argued that Rule 96ZQ(5) (ii) was not applicable during the period of the alleged offenses, as it had been replaced by Rule 96ZNC(5) (ii) effective from 1st May 2001. Under the new rule, the duty liability for the 1st fortnight was to be discharged by the 20th of that month and for the 2nd fortnight by the 5th of the succeeding month. The appellants had indeed paid their duty liability for the 1st fortnight by the 5th of the succeeding month, as required by the new rule. Therefore, the penalty imposed under the old rule was deemed unjustified.

Upon reviewing Rule 96ZNC(5) (ii) applicable during the relevant period, it was established that an independent processor failing to pay the duty amount by the specified date would be liable to pay the outstanding amount along with interest and a penalty. The penalty amount was to be equal to the outstanding duty by the 5th of the succeeding month or Rs. 5,000, whichever was greater. Since the appellants had discharged their entire duty burden for both fortnights before the 5th of the next month, there was no outstanding amount by that date. Consequently, the maximum penalty that could be imposed was Rs. 5,000. Therefore, the Tribunal held that the appellants were liable to a penalty of Rs. 5,000 in each case of default, resulting in a total penalty of Rs. 15,000. The appeal was disposed of accordingly, reducing the penalty amount significantly.