2007 (4) TMI 585 - AT - Central Excise

Summary

Issues:
Appeals related to penalty imposition for delayed duty payment under the Compounded Levy Scheme.

Analysis:
The appeals involved a common issue of penalty imposition for delayed duty payment under the Compounded Levy Scheme. The original authority had imposed penalties equal to the outstanding amounts at the end of the due dates, which were later reduced by the Commissioner (Appeals) to 10% of the original penalties. The appellant, a fabric processor, faced penalties for late payments in three separate cases. Each case involved a delay of one day in payment after the due dates, resulting in penalties imposed by the original authority, subsequently reduced by the Commissioner (Appeals).

In the first case (E/973/03), the appellant was required to pay Rs. 3,00,000 by June 15, 1999, but paid it one day late. The penalty imposed by the original authority was Rs. 3,00,000, reduced to Rs. 30,000 by the Commissioner (Appeals). Similarly, in the second case (E/974/03), the appellant had to pay Rs. 3,67,000 by the end of June 1999, paid it one day late, and faced penalties reduced from Rs. 3,67,000 to Rs. 36,700. In the third case (E/975/03), the appellant was required to pay Rs. 6,00,000 by April 15, 1999, paid it one day late, and saw penalties reduced from Rs. 6,00,000 to Rs. 60,000 by the Commissioner (Appeals).

During the hearing, the appellant's advocate attributed the delays to financial constraints and specific bank requirements for duty payments. The SDR highlighted the rule-based imposition of penalties for any delay, even if it was just for one day. The Tribunal considered both arguments and referred to a judgment by the Hon'ble Gujarat High Court in a similar case, emphasizing that penalties should be commensurate with any gain made by the party rather than equal to the outstanding duty amount.

Ultimately, the Tribunal found no intention to evade duty liability in the appellant's actions, as payments were made promptly the day after the due dates. Following the Gujarat High Court's precedent and considering the minimum prescribed penalty under Rule 96ZQ(5)(ii), the Tribunal reduced the penalties in all three cases to Rs. 5,000 each. Consequently, the appeals were partly allowed, and the penalties were adjusted accordingly.