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TMI Blog2013 (6) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the penalty levied on the respondents in view of the judgment of Madras High Court in Beauty Dyers v. Union of India & Ors., 2002 (52) RLT 636 (Mad.). 3. The facts giving rise to this appeal filed by the Commissioner, Customs and Central Excise are that M/s Webbing and Belting Pvt. Ltd. (the respondent company) is engaged in the processing of fabrics under Chapter Heading No.52 & 54 of CETA 1985. The respondents were working under the compounded levy Scheme as per the provisions of Notification No.43/98 dated 10.12.1998, as amended during the period April 1999 to February 2001. The annual capacity of production was fixed provisionally by the Commissioner, Central Excise, Meerut vide order dated 17.3.99/3.5.99 and finally on 8.3.2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal in the Tribunal, which has been dismissed. 7. This central excise appeal was admitted on the question of law as follows:- "Whether the appellate Tribunal on the facts and circumstances of the case could set aside the penalty in erstwhile Rule 96ZQ of Central Excise Rules, 1944?" 8. It is submitted by Shri Ashok Singh appearing for the Commissioner, Central Excise, Ghaziabad, that the Tribunal failed to appreciate that the Central Government is empowered to make the rules for determination of annual capacity of production (ACP) under Section 3A (2) of the Central Excise Act, 1944. The proviso to sub-section provides that where a factory producing the notified goods is in operation only during a part of the year, its production s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty along with interest at the rate of thirty six percent per annum calculated for the outstanding period on the outstanding amount; and (b) A penalty equal to an amount of duty outstanding from him or rupees five thousand, which ever is greater." 12. It is submitted that in similar parallel provisions under rule 96ZP, meant for manufacture of Hot Rolled products, this Court in PEE AAR Steels (P) Ltd. v. Commissioner of Central Excise, Meerut, 2004 (170) ELT 406 (All) held that the penalty mentioned in the fourth proviso to Rule 96 ZP (3), is not the maximum penalty but the only penalty, and hence such penalty has to be levied whenever there is failure to pay the duty by 10th of the month. The Tribunal was thus not competent to reduce t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce the amount of penalty as specified under section 11 AC" The appeal is allowed. Parties shall bear their own cost." 14. Shri Sharad Malviya appearing for the respondent has defended the order of the Tribunal. He submits that in Beauty Dyers v. Union of India (Supra) the Madras High court held that levy of interest on penalty under the Rule is not unreasonable. If the appellant had advantage of keeping the amount of tax without paying it to the State exchequer, the penalty was leviable. In that case the petitioners had filed writ petitions only on the basis that the authorities were informed that if the amount is not paid, they will levy charges as per Rule 96ZQ. As regards panel interest at 36% under Rule 96ZQ, it is reasonable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Commissioner of Customs and Central Excise v. M/s Majestic Auto Ltd. (supra). After referring to Union of India v. M/s Dharmendra Textile Processors, 2008 (231) E.L.T. 3 (SC), which dealt with the question of levy of penalty under Section 96ZQ and Rule 96ZO and had held that various degrees of culpability cannot be placed on the same pedestal, Section 11AC can not be construed in a manner by reading into it any discretion; that would be the proper way to give effect to the statutory intention. 16. This Court also considered the ratio of the decision in Union of India v. Rajasthan Spinning & Weaving Mills Ltd., 1998 (99) E.L.T. 33 (SC) in which the provisions of Section 11AC had come up for consideration, and the judgment of the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in Section 11AC." 17. On the above discussion, we are of the view that the Tribunal wrongly relied on the ratio of Beauty Dyers v. Union of India (Supra) decided by the Madras High Court. The question whether the penalty can be levied and whether there is any discretion in levy of penalty, stand covered by the judgment of this Court in Commissioner of Customs & Central Excise v. M/s Majestic Auto Ltd. (Supra). 18. The Central Excise Appeal is allowed. The order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi dated 25.6.2004 and the order of the Commissioner (Appeals) are set aside. The question of law is deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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