2004 (10) TMI 419 - AT - Central Excise

Summary

Issues:
1. Appeal against setting aside penalty by Commissioner (Appeals) in the case of M/s. Star Enterprises.
2. Imposition of penalty for non-payment of Central Excise duty by the manufacturer.
3. Interpretation of provisions under Rule 96ZP(3) of the Central Excise Rules, 1944 regarding penalty.

Analysis:
1. The Revenue filed an appeal against the Order-in-Appeal setting aside the penalty imposed on M/s. Star Enterprises by the Commissioner (Appeals). The Respondents did not appear but submitted Cross Objection. The case involved the determination of Annual Capacity of Production for Central Excise duty on hot rolled products. The Respondents failed to pay the full duty amount, leading to penalty imposition. The Commissioner (Appeals) set aside the penalty citing provisional fixation of production capacity. The Revenue argued for penalty imposition under Rule 96ZP(3) based on a High Court precedent. The Respondents contended that penalty is not applicable until final duty liability determination.

2. It was established that the Respondents were obligated to pay duty based on the determined Annual Capacity of Production. The provisional order for duty liability was not challenged by the Respondents, making them liable for payment. Rule 96ZP(3) mandates penalty if the duty is not paid by the specified date, with the penalty amount being the outstanding duty or Rs. 5000, whichever is higher. The Supreme Court precedent allows discretion in penalty imposition within the prescribed limits. Hence, a penalty of Rs. 20,000 was imposed on the Respondents, considering the circumstances. The appeal by the Revenue was allowed, and the Cross Objection was disposed of accordingly.

3. The judgment clarified that the provisional fixation of duty liability did not make the assessment provisional. The Respondents were required to fulfill their duty liability as per the provisional order. The penalty imposition was justified under Rule 96ZP(3) due to the non-payment of the full duty amount. The judgment highlighted the discretion in penalty imposition within the statutory limits, emphasizing that the penalty amount need not always be equivalent to the duty amount. The legal interpretation provided a balanced approach by considering both the obligation to pay duty and the discretion in penalty imposition.

This detailed analysis of the judgment addresses the issues involved comprehensively, outlining the legal arguments, interpretations, and the final decision reached by the Appellate Tribunal CESTAT, New Delhi.