2004 (6) TMI 546 - AT - Central Excise

Summary

Issues:
Challenge to imposition of penalty on the appellant for non-payment of duty at the revised rate.

Analysis:
The appellant, a textile processor, challenged the penalty imposed on them for not paying duty at the revised rate. The appellant argued that they were unaware of the change in duty rates and continued to pay at the old rate until advised otherwise by the Range Office in December 2000. The appellant contended that their duty liability was determined only in February 2001, and they had paid the arrears promptly. The appellant relied on Rule 96ZQ of the Central Excise Rules, stating that duty must be determined by the competent authority before payment. The appellant cited a precedent where a similar situation did not warrant a penalty as the duty determination was delayed.

The Departmental Representative countered, stating that the appellant declared an average value exceeding the threshold for the revised duty rate, making them liable for the increased duty. The Department argued that failure to discharge the duty liability promptly constitutes a violation of the rules, leading to penal action under Rule 96ZQ(5).

The Tribunal considered both arguments and noted that the appellant had filed a declaration for annual capacity determination in April 2000, and the competent authority fixed their capacity and duty liability in February 2001. The Tribunal observed that the appellant promptly adjusted their duty payments upon notification by the Range Officer, even before the formal determination of duty. The Tribunal emphasized that duty liability arises after determination under Rule 96ZQ(1), and since the duty was determined only in February 2001, the appellant had already paid their liability. Therefore, the Tribunal found no justification for imposing a penalty and set aside the penalties imposed on the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of timely duty determination by the competent authority before penalizing for non-payment. The appellant's proactive approach in adjusting duty payments upon notification was considered sufficient compliance, leading to the penalties being revoked.