2004 (10) TMI 524 - AT - Central Excise

Summary

Issues:
- Imposition of penalty on M/s. Bharat Steel Rolling Mills for non-payment of Central Excise duty.
- Dispute over the determination of Annual Capacity of Production and duty liability.
- Applicability of penalty under Rule 96ZP(3) of the Central Excise Rules, 1944.

Imposition of Penalty:
The Revenue appealed for the imposition of a penalty on M/s. Bharat Steel Rolling Mills for not paying Central Excise duty during May 1998. The Appellant argued that the duty liability was Rs. 6,69,400/- per month based on the Annual Capacity of Production under Section 3A of the Central Excise Act. The Additional Commissioner revised the duty liability to Rs. 4,44,475/- due to a change in production parameters. The Commissioner confirmed the duty demand but waived the penalty, stating that duty calculation required a determination of Annual Capacity of Production. The Appellant contended that the duty should have been paid based on the initial order until it was revised, and penalty was warranted under Rule 96ZP(3) of the Central Excise Rules, 1944.

Dispute over Determination of Production Capacity:
The Respondent argued that they had paid Rs. 50,000/- in May 1998 and requested a re-determination of their Annual Capacity of Production in April 1998. As the Commissioner had not revised the production capacity, they believed no duty was owed without a determination by the Commissioner. The Respondent referenced a previous case where the Supreme Court ruled against mandatory imposition of maximum penalties under Section 11AC of the Central Excise Act.

Applicability of Penalty under Rule 96ZP(3):
The Tribunal noted that the Respondents had not paid the full duty amount for May 1998, as they only deposited Rs. 50,000/- against the due amount of Rs. 6,69,400/-. Despite requesting a re-determination of production capacity, the initial duty order remained in effect until revised. The Tribunal held that the Appellants were liable for penalty under Rule 96ZP(3). However, considering the circumstances, a nominal penalty of Rs. 20,000/- was deemed appropriate instead of the maximum penalty. The appeal was concluded with the imposition of the nominal penalty in the interest of justice.