2014 (10) TMI 636 - HC - Central Excise

Imposition of penalty - compounded levy scheme - Failure to remit duty within prescribed time limit - Tribunal set aside penalty - Held that - Any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the Courts to import any specific period of limitation by implication, where there is really none, though Courts may always hold when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period. The period of five years has been held to be reasonable period for initiating penalty proceedings. Tribunal had rightly upheld the order of Commissioner (Appeals) deleting the penalty on the ground that the proceedings for the same were initiated after 5 years from the relevant date. Accordingly, no substantial question of law arises. - Following decision of Raghuvar (India) Ltd. s case 2000 (5) TMI 40 - SUPREME COURT OF INDIA - Accordingly, no substantial question of law arises. - Decided against Revenue.

Summary

Issues:
1. Whether penalty under Rule 96ZP(3) of the Central Excise Rules, 1944 can be imposed without discretion?
2. Can penalty under Rule 96ZP(3) be waived based on circumstances of delay in payment?
3. Applicability of Section 11A of the Central Excise Act, 1944 to the Compounded Levy Scheme.
4. Applicability of Section 38A of the Central Excise Act, 1944 to obligations under erstwhile Central Excise Rules before omission.

Analysis:

1. The appeal involved questions regarding the imposition of penalty under Rule 96ZP(3) of the Central Excise Rules, 1944 without discretion. The appellant questioned whether the provisions allowing a penalty equal to the duty amount for delay in payment could be considered ultra vires. The Tribunal dismissed the appeal citing precedent from CCE v. Hari Concast Ltd. The appellant relied on Collector of Central Excise v. Raghuvar (India) Ltd. to argue that the penalty was validly imposed within a reasonable time. However, the court found no merit in this argument.

2. The issue of waiving the mandatory penalty under Rule 96ZP(3) based on the circumstances of the delay in payment was also raised. The appellant contended that the penalty could be waived at the discretion of the authority. The court, after considering the arguments, upheld the order of the Commissioner (Appeals) deleting the penalty. The court referred to the judgment in State of Punjab v. Bhatinda District Cooperative Milk Producers Union Ltd. to establish a reasonable period of limitation for initiating penalty proceedings.

3. The question of the applicability of Section 11A of the Central Excise Act, 1944 to the Compounded Levy Scheme was raised. The court analyzed the provisions and concluded that the proceedings for imposing the penalty were initiated after five years, which was considered a reasonable period of limitation. The court cited the judgment in Raghuvar (India) Ltd.'s case to emphasize the importance of a specified period of limitation for penalty proceedings.

4. Lastly, the issue of the applicability of Section 38A of the Central Excise Act, 1944 to obligations under the erstwhile Central Excise Rules before omission was discussed. The court found that no substantial question of law arose in this matter. The Tribunal's decision to uphold the deletion of the penalty by the Commissioner (Appeals) was deemed appropriate due to the delay in initiating the penalty proceedings. Consequently, the appeal was dismissed based on the lack of merit.