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Issues: Challenge to reduction of penalty under Rule 96ZQ(5)(ii) of Central Excise Rules, 1944 for delay in duty payment.
In this judgment, the High Court of Gujarat at Ahmedabad addressed the challenge to an order reducing the penalty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 for a delay in paying duty. The petitioners had previously raised a similar issue in another case where the penalty was also reduced. The Court, in a previous judgment, established principles regarding the penalty under Rule 96ZQ(5), emphasizing that the penalty should not be disproportionate to the length of the delay. The Court highlighted that the penalty should not exceed three times the amount of interest levied, ensuring it is commensurate with the delay and serves the rule's purpose. The Court noted that the orders under challenge did not clarify if interest was paid for the delayed duty payment under Rule 96ZQ(5)(i). It directed that if interest had not been paid, it should be computed and paid within a month. The delay in payment ranged from 10 to 16 days, but neither the original nor the appellate authority considered this delay. Consequently, the Court set aside the orders imposing penalties and remanded the matter to the Deputy Commissioner of Central Excise and Customs for a reassessment of the penalty under Rule 96ZQ(5)(ii) based on the principles outlined in the previous judgment. Ultimately, the Court made the rule absolute to the extent of setting aside the penalties imposed, with no order as to costs. This judgment provides a clear interpretation of the penalty provisions under Rule 96ZQ(5) and ensures that penalties for delayed duty payments are reasonable and proportionate to the delay, emphasizing the importance of considering the circumstances of each case.
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