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2015 (10) TMI 852 - HC - Central ExciseDetermination of annual capacity - duty liability under Rule 96ZP(3) - Held that - Court in Bansal Alloys & Metals Pvt. Ltd s case (2010 (11) TMI 83 - PUNJAB & HARYANA HIGH COURT) while deciding the question of vires of Rules 96ZO(3) 96ZP and 96ZQ of the Rules held the said provisions to the extent of providing for mandatory minimum penalty without mens rea and without any element of discretion as excessive and unreasonable restriction on fundamental rights being arbitrary and were accordingly declared to be ultra vires the Act and the Constitution. - no substantial question of law arises in this appeal - Decided against assessee.
Issues:
1. Challenge to the vires of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 2. Charging interest on delayed payment of duty 3. Ultra vires of Rule 96ZP of Central Excise Rules, 1944 under the compounded levy scheme 4. Imposition and waiver of penalty under Rule 96ZP 5. Applicability of Section 38A of the Central Excise Act, 1944 Analysis: Challenge to the vires of Rule 5: The appeal raised the question of whether it was legally correct for the Tribunal to consider the challenge to the vires of Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997, in light of a previous judgment. The Court referred to previous decisions and concluded that the provisions for mandatory minimum penalty without mens rea and discretion were unreasonable and arbitrary, leading to a declaration of ultra vires against the Act and the Constitution. Charging interest on delayed payment: The issue revolved around the correct date from which interest should be charged on delayed payment of duty. The Court examined the provisions of Rule 96ZP(3) of the Central Excise Rules, 1944 and determined that interest should be charged from the date when duty was payable as per the Final Order, rather than from the 11th day of the month succeeding the determination of annual production capacity. Ultra vires of Rule 96ZP under the compounded levy scheme: The Court analyzed whether the provisions of Rule 96ZP of the Central Excise Rules, 1944, allowing for penalty equal to the amount of duty for delay in payment without discretion, were ultra vires of the Act and the Constitution. It was held that such provisions were excessive and unreasonable restrictions on fundamental rights, leading to a declaration of ultra vires. Imposition and waiver of penalty: The question arose whether the penalty under Rule 96ZP could be waived or reduced at the discretion of the adjudicating authority based on the extent and circumstances of delay in payment of duty. The Court reiterated that the provisions for mandatory penalty without discretion were arbitrary and declared them ultra vires. Applicability of Section 38A: The Court examined the applicability of Section 38A of the Central Excise Act, 1944, in respect of obligations and liabilities incurred under Rules 96ZO and 96ZP before their omission. The Court dismissed the appeal, stating that no substantial question of law arose in the case, thereby upholding the decision of the Tribunal based on previous judgments and legal principles. In conclusion, the High Court dismissed the appeal, emphasizing the principles established in previous cases regarding the legality and application of the relevant provisions of the Central Excise Act, 1944 and the Central Excise Rules, 1944.
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