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2004 (11) TMI 511 - AT - Central Excise
Issues:
- Appeal against reduction of penalty imposed on the respondent - Interpretation of Rule 96ZO(3) of the Central Excise Rules, 1944 - Discretion of the Assessing Authority in imposing penalties Analysis: 1. The appeal was filed by the Revenue against the reduction of penalty imposed on the respondent company from Rs. 12,50,000 to Rs. 20,000 by the Commissioner (Appeals). The dispute arose from the non-payment of Central Excise duty by the respondent on non-alloy steel ingots during a specific period. The Additional Commissioner confirmed the duty demand, interest, and imposed a penalty under Rule 96ZO(3) of the Central Excise Rules, 1944. 2. The Revenue argued that the penalty should be equal to the amount of duty not paid, citing the decision in the case of Pee Aar Steels (P) Ltd. v. C.C.E. The scheme of levying Central Excise duty under Sec. 3A of the Central Excise Act was deemed constitutional by the Supreme Court in the case of Supreme General Steel Mills. The Revenue contended that the penalty mentioned in Rule 96ZO(3) is mandatory and not discretionary. 3. On the other hand, the respondent contended that their failure to pay duty promptly was due to financial difficulties, not an intent to evade payment. They cited the Supreme Court decision in the case of State of Madhya Pradesh v. B.H.E.L. to support the argument that the Assessing Authority has discretion in levying penalties based on the circumstances of each case. 4. The Tribunal considered both arguments and found that while the respondent did not pay the duty promptly, there was no malicious intent involved. The Tribunal acknowledged the discretion of the Assessing Authority in imposing penalties, as highlighted in the B.H.E.L. case. Consequently, the Tribunal enhanced the penalty from Rs. 20,000 to Rs. 50,000, considering the gravity of the evidence and the lack of mala fide intention on the respondent's part. The decision aimed to balance the imposition of penalties with the interest of justice.
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