2011 (1) TMI 257 - HC - Central Excise

Duty paid belatedly - Penalty - Rule 96ZO of the Central Excise Rules - The statute does not require that any discretionary power should be confirmed on the officer - it will be open to the petitioners to pay the amounts due in five equal monthly instalments- The first instalment will be paid on or before 15th of February, 2011 and the subsequent instalments will be paid before 15th of every succeeding month - Accordingly the writ petitions are disposed of

Summary

Issues:
Challenge to penalty under Rule 96ZO of Central Excise Rules.

Analysis:
The petitioners, who are assessees under the Central Excise and Salt Act, had paid the duty belatedly, resulting in the imposition of a penalty under Rule 96ZO of the Central Excise Rules. The appellate authority upheld the penalty, but the Tribunal later reduced it. The department appealed to the Apex Court, which allowed the appeals citing a previous judgment. However, the Apex Court clarified that the order would not prevent the assessee from challenging the validity of Rule 96ZO. Subsequently, the petitioners filed writ petitions challenging the vires of the said rule, arguing that it mandates the officer to levy a penalty without discretion, making it unconstitutional.

The court noted that tax laws do not operate on principles of equity and that the Central Government framed the Rule under its powers conferred by the Central Excise Act, 1944. The court found that the rule did not require the officer to exercise any discretionary power, and as such, it could not be invalidated on the grounds typically used to challenge subordinate legislation. Consequently, the court rejected the contention that the rule was unconstitutional, as it was validly enacted under the law.

Additionally, the petitioners requested permission to pay the amount due in easy instalments due to financial constraints. After hearing both parties, the court allowed the petitioners to pay the outstanding amounts in five equal monthly instalments. The first instalment was to be paid by a specified date, with subsequent instalments due before the 15th of each succeeding month. The court warned that failure to make payments on time would allow the respondents to initiate recovery proceedings as permitted by law. Finally, the court disposed of the writ petitions subject to the installment payment arrangement granted to the petitioners.