2007 (3) TMI 766 - AT - Central Excise

Summary

Issues involved: Appeal against refusal to entertain appeals of Revenue for not imposing penalty under Rule 96ZP (3) of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944.

Summary:
1. The appeals were filed against the order of the Commissioner (Appeals) who refused to entertain Revenue's appeals challenging the non-imposition of penalties equal to the outstanding duties by the adjudicating authority. The Commissioner held that since the assessee's appeals against minimum penalties were dismissed, the Revenue's appeals could not be entertained due to the doctrine of merger of orders. The penalties in question were Rs. 2,13,444 and Rs. 52,186, which had been paid with interest.

2. The Commissioner found himself unable to entertain Revenue's appeals against the adjudicating authority's failure to impose penalties equal to the outstanding duties, which were higher than Rs. 5,000, as required under Rule 96ZP (3) of the Central Excise Rules, 1944.

3. Under the fourth proviso to Rule 96ZP (3), it was mandated that a penalty equal to the outstanding duty or Rs. 5,000, whichever is greater, must be imposed if the duty is not paid by the 10th day of the month. The appeals filed by the assessee did not involve the question of a higher penalty. The imposition of a higher penalty could only be raised by the Revenue in its appeal. The matter was not about setting aside the Rs. 5,000 penalty but about the imposition of a higher penalty by the Revenue.

4. The respondents filed Cross-Objections under Section 35B (4) of the Central Excise Act, 1944, citing precedents where proceedings under Rule 96ZP (3) lapsed after the omission of Section 3A of the Central Excise Act, 1944. The conflicting views of the Tribunal and the Punjab and Haryana High Court on the liability of the assessee post the omission of Section 3A necessitated a reference to a Division Bench for resolution.

5. Due to conflicting views in decisions, the matter was referred to a Division Bench to determine if the precedents regarding the lapse of proceedings under Rule 96ZP (3) post the omission of Section 3A needed reconsideration in light of the Punjab and Haryana High Court's decision. The case papers were to be placed before the President for further action.