2005 (8) TMI 522 - AT - Central Excise

Summary

Issues:
- Appeal against imposition of penalty less than the duty amount.
- Interpretation of Rule 96ZO(3) regarding penalty equal to outstanding duty.
- Discrepancy between Tribunal decisions and Board's directive on mandatory penalty equal to duty.
- Adjudicating Commissioner's discretion in imposing penalty.

Analysis:
1. The appeal was filed by the Department challenging the imposition of a penalty of Rs. 50,000 instead of the mandatory penalty equal to the duty amount of Rs. 30,62,219. The adjudicating Commissioner had justified the lenient penalty due to reasons such as non-production from non-supply of power. The Tribunal found no grounds to interfere with the Commissioner's decision, disagreeing with the Board's mechanical imposition of penalties without considering the gravity of each case.

2. Rule 96ZO(3) was cited by the Board, stating that a penalty equal to the outstanding duty or Rs. 5000, whichever is greater, should be imposed in case of failure to pay duty by the specified date. The Tribunal clarified that such provisions only set a maximum limit on the penalty, allowing for discretion in penalty imposition based on the circumstances of each case.

3. The Tribunal criticized the Board's directive for officials to impose a mandatory penalty equal to the duty amount in all cases, leading to unnecessary litigation. This approach forced even cooperative assesses to appeal, wasting time that could be spent on more substantive matters. The Tribunal deemed the directive draconian and emphasized the need for a case-by-case assessment of penalties rather than a blanket imposition.

4. Ultimately, the Tribunal upheld the penalty of Rs. 50,000 imposed by the adjudicating Commissioner, rejecting the Department's appeal for an increase to Rs. 30,62,219. The decision highlighted the importance of considering the specific circumstances of each case in determining penalties, rather than mechanically applying fixed penalty amounts without regard for the individual case merits.