2004 (11) TMI 174 - AT - Central Excise

Summary

Issues:
- Penalty imposed on the respondents under the 4th proviso to sub-rule (3) of Rule 96ZO of the Central Excise Rules, 1944.
- Discretion of quasi-judicial authorities in levying penalties.
- Applicability of case law in determining penalties under Rule 96ZO(3).

Analysis:
1. The appellant, the Revenue, challenged the dropping of a penalty of Rs. 3,33,333.50 imposed on the respondents for a 15-day delay in duty payment under the 4th proviso to Rule 96ZO(3). The first appellate authority vacated the penalty, deeming it disproportionate and an abuse of quasi-judicial power. The Revenue appealed based on a decision from the Allahabad High Court, arguing that the Tribunal lacked the competence to reduce the prescribed penalty. However, the respondents contended, citing a Supreme Court decision, that quasi-judicial authorities have discretion in penalty imposition based on case circumstances.

2. The Tribunal examined relevant case law and legislative intent, finding that previous decisions did not directly apply to penalties under Rule 96ZO(3). The Supreme Court's ruling in a similar context clarified that penalties were not mandatory but discretionary, based on the amount specified in the rule. In this case, the discretion of the quasi-judicial authority extended between Rs. 5,000 and the duty amount. Considering the prompt payment of interest by the respondents, the Tribunal deemed a penalty of Rs. 5,000 reasonable, contrary to the vacated penalty.

3. The lower appellate authority's reasoning for vacating the penalty was deemed flawed by the Tribunal. The authority's reliance on the timing of receiving the Commissioner's order on Annual Capacity of Production (ACP) was considered insufficient justification for the delay in duty payment. The Tribunal noted that the respondents could have estimated their duty liability as they did previously, without awaiting the ACP order. Additionally, the original authority's imposition of the maximum penalty without reasoning was incorrect, as the discretion lies with the quasi-judicial authority to determine the penalty amount based on the circumstances.

4. Consequently, the Tribunal set aside the lower appellate authority's decision and imposed a penalty of Rs. 5,000 on the respondents under the 4th proviso to Rule 96ZO(3) of the Central Excise Rules, 1944, based on the discretion granted to quasi-judicial authorities in determining penalties for duty payment delays.