2008 (12) TMI 610 - AT - Central Excise

Summary

Issues:
Appeal against penalty imposed under Rule 96ZO of the Central Excise Rules, 1944 for determination of annual production capacity and duty demand for the period from July 1999 to March 2000.

Analysis:
The case involved a dispute regarding the determination of annual production capacity and consequent duty demand for a specific period. The appellant, a manufacturer, transitioned from manufacturing alloy steel to non-alloy ingots under a compounded levy scheme. The Commissioner initially determined the annual capacity at 12,800 MT, which was later re-determined to the same amount. A show cause notice was issued for demanding differential duty, leading to confirmation of duty demand by the Commissioner. The issue of penalty imposition was left open in the Commissioner's order, which was later imposed on the appellant under Rule 96ZO of the Central Excise Rules, 1944.

The appellant argued that no valid determination was made until 6-2-2001, as the original order was set aside and redetermined. They contended that they were challenging the duty demand, and there was no mala fide intention in not paying the dues. The appellant highlighted conflicting decisions by different tribunals regarding the liability under the compounded levy scheme.

The Department argued that the duty became payable either on 31-3-2000, 6-2-2001, or at the latest, on 16-4-2001. They emphasized that the delay in payment of duty was unjustified, leading to the imposition of penalty as a necessary consequence, citing the Supreme Court's decision on the matter.

The Tribunal considered the changes in law, including the deletion of Section 3A of the Central Excise Act and the subsequent insertion of Section 38A. They noted that all liabilities, including penalty liability, were protected during the relevant period. The Tribunal held that the delay in payment of tax post-16-4-2001 violated the rules under the compounded levy scheme, justifying the imposition of penalty under Rule 96ZO. They emphasized that mens rea was not required for penalty imposition, aligning with the Supreme Court's decision.

Ultimately, the Tribunal rejected the appellant's appeal, upholding the penalty imposed under Rule 96ZO of the Central Excise Rules, 1944.