2006 (4) TMI 306 - AT - Central Excise

Summary

Issues:
Late payment penalty under Rule 96ZO(3)(ii) of Central Excise Rules, 1944.

Analysis:
The judgment deals with a stay application against the imposition of a penalty for late payment of duty under Rule 96ZO(3)(ii) of the Central Excise Rules, 1944. The tribunal granted the stay as the issue was narrow, and both parties consented for disposal of the appeal. The appellants had opted for paying duty under the compounded levy scheme for a specific period and had discharged the duty liability as determined by the competent authority. They had also sought abatement of duty for the period when their factory was closed. The Commissioner decided the abatement claim, which resulted in the appellants paying an amount short. A show cause notice was issued for penalty imposition, despite the appellants having already paid the duty liability and interest. The tribunal noted that the authorities belatedly decided the abatement claim, leading to the short payment, which the appellants rectified promptly upon direction. The tribunal found the department's allegation of penalty imposition under Rule 96ZO unsustainable, as the duty remained unpaid due to the authorities' error.

The tribunal, after considering the submissions and records, set aside the order imposing the penalty and allowed the appeal. The judgment highlights the importance of timely directions from authorities and emphasizes that penalties should not be imposed when the duty remains unpaid due to errors on the part of the authorities. The decision underscores the need for procedural fairness and timely communication in matters of duty payments and penalties under the Central Excise Rules, 1944.