2005 (2) TMI 396 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 96ZB(3) based on final determination of duty liability disputed by the appellant.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore arose from the order of the Commissioner (Appeals), Cochin, upholding a penalty of Rs. 1,52,274/- under Rule 96ZB(3). The appellant disputed the provisional determination of annual capacity and the subsequent duty liability determination by the Commissioner. The Commissioner's final order dated 15-2-2001 determined the duty liability to be Rs. 2,23,100/-. The appellant was required to pay the differential duty of Rs. 1,52,274/- based on this final determination.

The appellant contended that the penalty should not be imposed as the final determination was made on 15-2-2001, and the duty was paid in accordance with this determination after the dispute was settled. Citing a Tribunal decision in Bharat Agrico v. CCE [2003 (54) RLT 687], the appellant argued that when the determination of annual capacity is under dispute and duty is paid only after the dispute is resolved, no penalty should be imposed.

After considering the submissions and relevant case law, the Tribunal noted that despite the provisional determination order, the appellant chose to pay duty based on actual production. As per the Rules, once a provisional order determining duty liability is issued, the assessee is required to pay the determined amount. Therefore, the Tribunal held that a penalty is imposable in this case. However, considering the circumstances, the Tribunal found that a maximum penalty equivalent to the unpaid duty amount was not warranted. Consequently, the penalty was reduced to Rs. 30,000/- under Rule 96ZB(3), while upholding the Commissioner's order with this modification.

In conclusion, the appeal was partly allowed by the Tribunal, maintaining the imposition of a reduced penalty under Rule 96ZB(3) based on the final determination of duty liability disputed by the appellant.