2000 (11) TMI 518 - AT - Central Excise

Summary

Issues:
1. Determination of duty liability based on textile fabrics processing.
2. Imposition of penalty under Rule 96ZQ for failure to pay duty.

Analysis:
1. The appellant, a processor of textile fabrics, filed a declaration under the Hot Air Stenter Independent Textile Processors' Annual Capacity Determination Rules, 1998. The Commissioner initially passed a provisional order determining the annual capacity and duty payable, which the appellant discharged. Subsequently, a final order was issued with a higher duty liability due to the inclusion of galleries in the stenter, resulting in a differential duty. The appellant paid the differential duty promptly upon receipt of the final order and continued to pay duty at the revised rate. However, a penalty notice was issued for the unpaid differential duty, leading to a penalty imposition equal to the duty demanded. The appellant contended that no penalty should be imposed as the duty was paid promptly, but the Assistant Commissioner imposed the penalty. The appeal against the penalty imposition was dismissed for failure to deposit the penalty amount as per the Commissioner (Appeals) stay order.

2. The penalty was imposed under Rule 96ZQ, which states that failure to pay the duty by specified dates leads to penalty liability. The appellant had been consistently paying the duty monthly within the provided time frame, and there was no allegation of non-compliance. The appellant's increased duty liability was due to the department's recalculation, not the appellant's fault. Although the correctness of including galleries in capacity calculation was debatable, the appellant did not challenge the final order. The appellant acted in good faith, promptly paying the differential duty upon receipt of the final order. The Tribunal found no justification for imposing a penalty as the appellant had fulfilled its duty obligations diligently. Consequently, the appeal was allowed, and the penalty imposed was set aside.

This judgment highlights the importance of timely compliance with duty obligations, the implications of provisional and final orders in duty determination, and the necessity for fair and reasonable penalty imposition based on the circumstances of the case.