2004 (10) TMI 432 - AT - Central Excise

Summary

Issues: Penalty enhancement under Rule 96ZP(3) by the Commissioner (Appeals)

In this case, the main issue revolves around the penalty enhancement under Rule 96ZP(3) by the Commissioner (Appeals). The appellant contested that the penalty equal to the duty amount was wrongly imposed since the duty had already been paid along with interest. On the contrary, the SDR argued that the penalty imposed by the adjudicating authority was insufficient, and the Commissioner (Appeals) rightfully enhanced it.

Analysis:

The Tribunal carefully considered both arguments and reviewed the facts. It was established that the appellants had failed to pay the full duty for a specific period, which resulted in a total unpaid duty of Rs. 5,23,248. Upon receiving a show cause notice, the appellants paid the duty amount along with interest. The adjudicating authority initially imposed a penalty of Rs. 25,000 under Rule 96ZP(3), taking into account the duty payment. However, the Commissioner (Appeals) increased the penalty to match the duty amount without providing any reasoning for the enhancement.

The Tribunal noted that the appellants had already paid the entire differential duty and the non-payment was due to financial hardship, not deliberate evasion. Additionally, interest for the delayed payment had also been settled. Therefore, the Tribunal found the penalty enhancement to be unjustified and reduced it to Rs. 50,000. The Commissioner's failure to consider the circumstances and provide adequate justification for the penalty increase led to the modification in the penalty amount.

Ultimately, the Tribunal upheld the impugned order with the revised penalty amount, emphasizing that the penalty should be proportionate to the violation and the circumstances of the case. The appeal was disposed of based on these considerations.