2017 (9) TMI 1184 - HC - Central Excise

Demand - Imposition of penalty - Compounded Levy Scheme - CTD bars, falling under Chapter heading 72 of the Central Excise Tariff Act, 1985 - Held that - similar issue decided in the case of The Commissioner of Central Excise, Chennai-II, Chennai Versus M/s. Arun Vyapar Udyog Ltd. 2016 (11) TMI 191 - MADRAS HIGH COURT , where it was held that Penalty, as such, cannot be imposed, in the light of the decision of the Hon ble Supreme Court in Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise 2015 (11) TMI 1172 - SUPREME COURT , wherein, the issue, which came up for consideration before the Hon ble Supreme Court, was to the correctness of the judgments of High Courts, which struck down Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994, relating to penalty, as ultra vires of a parent Act and violative of Articles 14 and 19(1)(g) of the Constitution of India - appeal dismissed.

Summary

Issues Involved:
1. Whether the Tribunal can exercise discretion under Rule 96 ZP (3) of the Central Excise Rules, 1944 to reduce penalties imposed for duty payment default.
2. Whether the Tribunal's reliance on its own decision without considering a decision of a Division Bench of the High Court was justified.

Analysis:
1. The Civil Miscellaneous Appeal challenged Final Order No.246 of 2006 by CESTAT, Chennai, on the issue of the Tribunal's discretion under Rule 96 ZP (3) to reduce penalties for duty payment defaults. The appellant questioned the Tribunal's authority to lessen penalties imposed by the adjudicating authority and upheld by the lower appellate forum. The Court referred to the decision in Commissioner of Central Excise, Chennai-II Vs. Arun Vyapar Udyog Limited, where the Tribunal's power to impose penalties was discussed. The Court cited a Supreme Court ruling that penalties under certain rules of the Central Excise Act were deemed ultra vires. Consequently, the Court dismissed the appeal, upholding the Tribunal's decision to reduce penalties.

2. The second issue raised in the appeal concerned the Tribunal's reliance on its own decision without considering a relevant decision by a Division Bench of the High Court. The Court emphasized the importance of addressing all substantial questions of law raised in appeals. In this case, the Tribunal's decision was upheld, and the Court found no grounds for interference. The appellant's argument regarding the applicability of a Supreme Court ruling to the case at hand was considered and rejected. The Court dismissed the appeal based on the precedent set by previous judgments and the submission made by the Central Government Standing Counsel.

In conclusion, the High Court of Madras upheld the Tribunal's decision to exercise discretion in reducing penalties for duty payment defaults, citing relevant legal precedents and Supreme Court rulings. The Court dismissed the appeal, emphasizing the importance of addressing all substantial legal issues raised and considering relevant decisions in reaching a judgment.