2011 (7) TMI 977 - AT - Central Excise

Demand - Rule 96ZO(3) of the erstwhile Central Excise Rules, 1944 - whether the lower authority was justified in reducing the penalty imposed by the adjudicating authority. The records evidently disclose that the adjudicating authority had imposed penalty equivalent to the amount of duty confirmed against the respondents and their failure to pay the same on time - Apex Court in Dharmendra Textile Processors case (2008 (9) TMI 52 - SUPREME COURT), it was necessary for the authorities below to impose penalty equivalent to the duty demand confirmed against the assessee - Decided against the assessee

Summary

Issues Involved:
Appeal against order reducing penalty imposed by adjudicating authority.

Analysis:
The appeals before the Appellate Tribunal arose from a common order passed by the Commissioner (Appeals), Jaipur, confirming the demand under Rule 96ZO(3) of the Central Excise Rules, 1944, and imposing penalties. The adjudicating authority had imposed duty and penalties for specific periods. The Commissioner (Appeals) reduced the total penalty from Rs. 59,19,894 to Rs. 3,00,000, citing lack of mens rea on the part of the assessee. The issue revolved around whether the lower authority was justified in reducing the penalty. The Appellate Tribunal examined the records, including the impugned orders and the absence of the assessee, and considered relevant case laws like Union of India vs. Dharmendra Textile Processors and C.C. & C.E., Coimbatore vs. Kannapiran Steel Re-Rolling Mills. The Tribunal noted that the adjudicating authority had imposed penalties equal to the confirmed duty against the assessee, emphasizing the mandatory nature of Rule 96ZO and the obligation to impose penalties matching the duty demand. Citing the decision in Kannapiran Steel Re-Rolling Mills case, the Tribunal held that the penalty imposed by the adjudicating authority should be confirmed, as discretion to reduce penalties was not available under the rules. Therefore, the appeals were allowed, the cross-objections were dismissed, and the impugned order reducing the penalty was set aside, restoring the penalty imposed by the adjudicating authority.

Conclusion:
The Appellate Tribunal, after considering the relevant provisions and case laws, upheld the imposition of penalties by the adjudicating authority, emphasizing the mandatory nature of the rules and the obligation to match penalties with confirmed duty demands. The decision serves as a reminder of the strict enforcement of penalties in excise matters and the limited scope for discretion in penalty imposition.