2000 (6) TMI 108 - AT - Central Excise

Summary

Issues:
1. Stay and waiver of penalties sought by the appellants.
2. Interpretation of Rule 96ZQ of the Central Excise Act, 1944 regarding penalty imposition.
3. Applicability of Section 11AC of the Central Excise Act, 1944 on penalty imposition.
4. Distinction between interest payment and penalty imposition under the Act.
5. Impact of abatement on penalty calculation.
6. Consideration of internal problems leading to late payment.

Analysis:
1. The appellants sought stay and waiver of penalties, which were disposed of after considering the common facts and appellants involved in the case. The issue was small and well-defined, leading to the main appeals being taken up for disposal after hearing both parties.

2. The appellants operated under Rule 96ZQ of the Central Excise Act, 1944, which required a specific monthly deposit per chamber by the 15th of each month. The Assistant Commissioner imposed high penalties for delays in payment, citing the rule's provisions. However, the Tribunal found that the high quantum of penalty raised the issue of sustainability, leading to a detailed analysis of penalty imposition under the rule.

3. The Tribunal analyzed the wording of Rule 96ZQ and compared it with Section 11AC of the Act to determine the mandatory nature of penalty imposition. Referring to a previous judgment, the Tribunal found that the maximum penalty was not mandatory in all cases, questioning the Assistant Commissioner's belief in imposing equivalent penalties.

4. The distinction between interest payment and penalty imposition under Sections 11AA, 11AB, and 11A of the Act was highlighted. The Tribunal emphasized that the mandatory nature of interest payment did not automatically extend to penalties, leading to a reevaluation of the penalty amount in this case.

5. The impact of abatement on penalty calculation was considered, with the Tribunal dismissing the argument that abatement should affect subsequent months' payments. The order of abatement in December 1999 did not retroactively impact the penalty calculation for earlier months.

6. The Tribunal acknowledged internal problems causing the late payment and the nature of the duty payment as a deposit for future clearances. Considering these factors, the penalties were reduced to token amounts of Rs. 5,000 each, as the late payment was not deliberate, and the duty payment included future clearance deposits. The appeals were allowed based on these considerations.