2007 (8) TMI 529 - AT - Central Excise

Summary

Issues:
1. Appeal against penalty imposition by Commissioner (Appeals) for duty outstanding.
2. Closure of manufacturing unit and duty liability.
3. Interpretation of Rule 96ZP(3) regarding penalty imposition.

Analysis:
1. The Revenue appealed against the Commissioner (Appeals) order for not imposing a penalty equal to the outstanding duty amount. The dispute arose from the closure of a manufacturing unit and the subsequent duty liability. The Appellate Tribunal reviewed the case to determine the correct penalty amount.

2. The respondent, engaged in manufacturing non-alloy steel products, opted for a capacity-based assessment scheme under Rule 96ZP of the Central Excise Rules. The unit's annual capacity was 6850.451 MT, with a monthly production of 570.871 MT, requiring a monthly duty deposit of Rs. 1,71,261 by the 10th of each month.

3. The respondent closed the unit by dismantling it and informed the department about the closure effective from 1-10-1998. The Appellate Commissioner found that the duty liability persisted from 1-10-1998 to 12-10-1998 due to delayed intimation. The Commissioner (Appeals) imposed a penalty of Rs. 10,000 under Rule 96ZP(3), which the Revenue contested, citing the need for a penalty equal to the outstanding duty amount.

4. The Tribunal referred to the High Court's ruling in PEE AAR Steels (P) Ltd., emphasizing that the penalty under Rule 96ZP(3) should equal the outstanding duty amount, not a lesser sum. Therefore, the Tribunal modified the penalty to Rs. 62,796, aligning it with the duty outstanding during the relevant period. The appeal was allowed based on this adjustment.