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TMI Blog2011 (1) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... for the inordinate delay in re-determination of duty liability in terms of sub-section (sic) of Section 3A. Under these circumstances, it is a fit case for not sustaining penalties, penalties are set aside and the appeals are allowed - E/716 & 1623/2006-SM(BR) - 150-151/2011-SM(BR)(PB) - Dated:- 27-1-2011 - Shri M. Veeraiyan, J. REPRESENTED BY : Shri Bipin Garg, Advocate, for the Appellant. Shri K.P. Singh, SDR, for the Respondent. [Order]. The appeal No. E/716/06 is by M/s. Narbadha Alloys (I) Pvt. Ltd. 1.2 The appeal No. E/1623/06 is by M/s. Balaghat Steels Pvt. Ltd. 1.3 Both appeals arise out of a common Order-in-Appeal No. 129-130-CE/BPL/2005 dated 31-10-05. 2. Heard both sides. Both sides filed the written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the appellant, the Commissioner, Central Excise provisionally fixed the annual capacity as 96 MT under the Induction Furnace Annual Capacity Determination Rules, 1997. The appellant was required to pay duty amounting to Rs. 36,00,000/- on completion of six months ending September and similar amount again by March in a Financial year, in terms of provisions of Rule 96ZO(1) of the erstwhile Central Excise Rules, 1944. The appellant opted for payment of duty @ Rs. 750/- PMT on the capacity of production so determined by the Commissioner. On scrutiny of the documents, it was observed that during the financial year 1-4-90 to 31-3-99 and from 1-4-99 to 31-3-2000, the appellants though required to pay Rs. 1,44,00,000/- had actually paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of clearance of the goods as envisaged under para 1 of Rule 96ZO. The appellants claimed for re-determination of duty liability on actual production basis in May, 1999. The Commissioner has re-determined the duty liability substantially reducing the duty liability compared to provisionally determined duty liability. A small short payment in duty as per re-determined duty liability has been the ground for imposition of penalties. The imposition of penalties are not warranted in view of the following reasons : (1) That the Commissioner has determined actual production under sub-section (4) of Section 3A, therefore clause (a) of part (II) of Rule 96ZO(1) is not applicable. (2) That in sub-section (4) of Section 3A only refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in not levying penalty in the light of the decision of the Hon ble Supreme Court in the case Dharamendra Textile Processors reported in 2008 (231) E.L.T. 3 (S.C.) and Rajasthan Spinning Weaving Mills Ltd. reported in 2009 (238) E.L.T. 3. 7. When the matter was listed for dictation of the order, learned Advocate for the appellants brought to my notice the decision of the Hon ble High Court of Punjab Haryana in the case of Bansal Alloys Metals Pvt. Ltd. v. Union of India reported in 2010 (260) E.L.T. 343 (P H) by which the provisions in the Rules 96ZO, 96ZP and 96ZQ perscribing the minimum penalty for delay in payment without any discretion and without considering extent of delay and circumstances are held ultra vires of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise and such annual capacity of production shall be deemed to be the annual production such goods by such factory : Provided that where a factory producing notified goods is in operation only during a part of the year, the production thereof shall be calculated on proportionate basis of the annual capacity of production. (3) The duty of excise on notified goods shall be levied, at such rate as the Central Government may by notification in the Official Gazzette, specify, and collected in such manner as may be prescribed : Provided that, where a factory producing notified goods did not produce the notified goods during any continuous period of not less than seven days, duty calculated on a proportionate basis shall be abated in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for deviation from the manner of determining the duty liability. Sub-section (5) envisages the situation that when the assessee are paying duty in terms of sub-section (2) and sub-section (3), and when subsequently re-determination takes place in terms of sub-section (4) the duty already paid shall be adjusted and the assessee shall pay deficiency or be entitled to a refund. 9.2 In the light of the above provisions, it would be appropriate to consider the facts of the present case. In appeal No. E/716/06, the duty liability was provisionally determined in terms of sub-section (2) of Section 3A and accordingly it was held that the appellant was required to pay a differential duty of Rs. 43,09,279/- for the year 1998-99 and differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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