2005 (5) TMI 592 - AT - Central Excise

Summary

Issues:
1. Defaulted payment of Compounded Levy amount.
2. Imposition of penalty on the respondents.
3. Applicability of Tribunal's decision in compounded levy cases.
4. Interpretation of penalty provision under Rule 96ZP(3).

Analysis:
1. The case involved the defaulted payment of Compounded Levy amount by the respondents, totaling Rs. 1,68,650/- for one period and Rs. 75,521/- for another period. The amounts were paid after a significant delay, with the interest amount remaining unpaid till the date of the hearing.

2. The lower appellate authority had initially set aside the penalty imposed on the respondents, citing a change in the management of the company as a reason for non-imposition of penalty. However, the presiding judge found that the delay in payment warranted the imposition of a penalty equal to the duty amount as prescribed under Rule 96ZP(3).

3. The respondent's accountant referenced a Tribunal decision in the case of M/s. Bhomi Re-Rolls Pvt. Ltd. v. CCEx, Aurangabad, which held that no penalty is imposable in compounded levy cases, following a prior decision in the case of M/s. Mitra Steel & Alloys Pvt. Ltd. v. CCE, Raigad. However, the judge disagreed with this interpretation, stating that the Tribunal's decision in Mitra Steel could not be followed in light of a decision by the Hon'ble High Court of Allahabad in the case of Pee Aar Steels, which upheld the penalty provision under Rule 96ZP(3).

4. The judge emphasized that the penalty provision under Rule 96ZP(3) is not merely a maximum penalty but the only penalty applicable, to be imposed equal to the amount of duty outstanding in case of failure to pay duty by the prescribed date. Considering the long delay in payment and the non-payment of interest, the judge concluded that the penalty should be imposed on the respondents, overturning the lower appellate authority's decision and restoring the Order-in-Original in favor of the department.

In conclusion, the department's appeal was allowed, and the penalty equal to the duty amount was upheld, based on the interpretation of the penalty provision under Rule 96ZP(3) and the precedence set by the decision of the Hon'ble High Court of Allahabad.