2004 (11) TMI 563 - AT - Central Excise

Summary

Issues:
Whether penalty imposed under the compounded levy scheme for delayed payment of duty shall be equal to the duty amount or if there is discretion to reduce it.

Analysis:
The appellant filed an appeal against the adjudication order imposing a penalty equal to the duty amount paid with interest. The appellant argued for a reduction in the penalty, citing various legal precedents. The appellant relied on decisions such as State of Madhya Pradesh v. Bharat Heavy Electricals, Ambuja Synthetics Mills Ltd. and Anr. v. Union of India and Ors., and Beauty Dyers v. Union of India to support their contention that the assessing authority has the discretion to levy a lesser penalty. On the other hand, the Revenue cited the decision of the Hon'ble Allahabad High Court in Pee Aar Steels (P) Ltd. v. CCE, Meerut, where it was held that the Tribunal cannot reduce the penalty imposed strictly.

The central issue in this case was whether the penalty under the compounded levy scheme for delayed payment of duty should be equal to the duty amount or if there is discretion to reduce it. The Tribunal referred to the decision of the Hon'ble Supreme Court in State of Madhya Pradesh v. BHEL, where it was held that the assessing authority has the discretion to levy a lesser penalty based on the facts of each case. This view was also supported by the Hon'ble High Courts of Gujarat and Madras in the cases of Ambuja Synthetics Mills Ltd. & Anr. and Beauty Dyers respectively. These courts held that the penalty mentioned in the Act is the maximum, and the authorities have the discretion to impose a lesser penalty. Following these precedents, the Tribunal reduced the penalty to Rs. 50,000, in line with the decision in State of Madhya Pradesh v. BHEL.

In conclusion, the Tribunal held that the penalty imposed under the compounded levy scheme can be reduced at the discretion of the assessing authority or the appellate authority based on the facts and circumstances of each case. The appeal was disposed of with the penalty reduced to Rs. 50,000 in accordance with the legal precedents cited.