2004 (11) TMI 143 - AT - Central Excise

Summary

Issues:
1. Penalty imposed under Rule 96ZO(3) for delay in payment of duty.
2. Consideration of extenuating circumstances for reducing the penalty.
3. Competency of the Tribunal to reduce penalty under Rule 96ZO(3) based on previous judgments.

Detailed Analysis:
1. The appellants, engaged in manufacturing 'MS Ingots,' operated under the Compounded Levy Scheme and were required to pay duty at a fixed rate per month. Due to furnace closures during specific months in 1998, they submitted abatement claims under Rule 96ZO(2), which were approved. However, due to delays in payment beyond prescribed dates, interest was levied on the belatedly paid duty. The original authority imposed a penalty of Rs. 2,83,920, which was reduced to Rs. 1 lakh by the first appellate authority. The appellant contested this penalty as excessive, leading to the current appeal.

2. The appellant's counsel argued that there was no intent to evade duty payment and the delay was due to awaiting abatement claim outcomes to ensure accurate duty payment. The total penalty was paid in four installments without significant delays. Citing precedents where penalties were reduced in similar circumstances, the counsel sought leniency. However, the Department's Representative opposed further reduction, emphasizing the Tribunal's limited authority to alter penalties under Rule 96ZO(3). Reference was made to a High Court judgment upholding penalties imposed under similar provisions.

3. The Tribunal analyzed the provisions of Rule 96ZO(3) in comparison to Rule 96ZP(3), highlighting their similarity in governing Compounded Levy Schemes for different industries. Referring to a High Court ruling on penalties under Rule 96ZP, it was established that the prescribed penalty was mandatory in case of duty payment failures. In the current case, the penalty of Rs. 2,83,920 imposed by the original authority was deemed appropriate, as it was the greater amount between the duty and the prescribed penalty. Despite the reduction to Rs. 1 lakh by the Commissioner, the Tribunal upheld the penalty, as the Revenue did not challenge this reduction. Thus, the appeal against the penalty imposition was rejected based on legal precedents and the applicable provisions of Rule 96ZO(3).