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Issues involved: Challenge to the constitutional validity of Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944.
Judgment Summary: Issue 1: Constitutional Validity of Rule 96ZQ(5)(ii) The judgment addressed the challenge to the constitutional validity of Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944. The rule prescribed penalties for independent processors of textile fabrics who fail to pay duty by the specified date. The court noted that the rule imposed penalties to ensure timely payment of duties and deter non-compliance. It emphasized the importance of taxpayers fulfilling their obligations promptly to enable the government to function effectively. The court found that the rule provided a source of power for imposing penalties, rejecting the argument that there was no such source. Issue 2: Imposition of Penalty The judgment discussed the imposition of penalties under Rule 96ZQ(5)(ii). It highlighted that the rule lacked specific guidelines for imposing penalties and did not clarify whether the mentioned amount was a minimum or maximum. Drawing on a previous Supreme Court case, the court emphasized the need for penalties to be reasonable and not confiscatory. It referenced a case where the court held that penalties should not be imposed solely for failures without valid reasons. The court suggested that authorities should have discretion in levying penalties based on individual circumstances. Conclusion In conclusion, the court directed the assessing officer to reconsider the penalty aspect of the cases in light of the discussions provided. The judgment did not disturb the orders related to duty imposition and interest recovery. The petitions were allowed only to the extent of reconsidering penalties. The court did not address the issue of retrospective effect of the notification in question, leaving it open for the authority to consider.
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