2005 (4) TMI 328 - AT - Central Excise

Summary

Issues:
1. Penalty imposition on the respondents for non-discharge of duty liability as per Commissioner's order.
2. Dispute regarding the type of furnace used by the respondents affecting duty discharge.
3. Applicability of penalty under Rule 96ZP of the Central Excise Rules.

Issue 1: Penalty Imposition
The case involved appeals against an Order-in-Appeal that set aside penalties imposed on M/s. Sahara Steel Rolling Mills for not discharging duty liability as per the Commissioner's order. The Adjudicating Authority confirmed duty amounts and imposed penalties, which the Commissioner (Appeals) nullified citing a Tribunal decision. The Tribunal disagreed with the Commissioner's finding that due to a disputed issue regarding furnace type, no penalty should be imposed. It was emphasized that once duty liability is determined by the Competent Authority, it must be discharged unless set aside by a higher authority. The Tribunal noted that in a similar case, penalty was upheld for not discharging duty on time. Consequently, a penalty of Rs. One lakh was imposed on the respondents, not equivalent to the duty amount.

Issue 2: Dispute Over Furnace Type
A key aspect was the dispute between the Department and the respondents regarding the type of furnace used, affecting duty discharge. The Commissioner (Appeals) observed this dispute and the subsequent resolution in February 2000 as a reason for setting aside the penalty. However, the Tribunal clarified that regardless of disputes, duty liabilities must be discharged as per the order until challenged and changed by a higher authority. The case of Sada Shiv Castings Ltd. was cited to highlight that clearing goods without discharging duty on time attracts penalties. Therefore, the Tribunal found the dispute over furnace type did not exempt the respondents from penalty imposition.

Issue 3: Applicability of Penalty Rule
The Tribunal considered the applicability of penalty under Rule 96ZP of the Central Excise Rules in this case. While acknowledging the duty liability non-compliance by the respondents, the Tribunal highlighted that the penalty imposed should not be equivalent to the duty amount. In the interest of justice, a penalty of Rs. One lakh was deemed appropriate for both cases. This decision aimed to balance enforcing duty discharge obligations with a proportional penalty amount, ensuring fairness in the judgment.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT, New Delhi, providing a comprehensive understanding of the legal reasoning and decision-making process involved in the case.