9911796707
TMI Blog2014 (6) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mere fact that without mens rea, an can be punished or a penalty could be imposed is not a blanket power without providing for any justification. In the Indian Constitutional scheme, power of legislature is circumscribed by fundamental rights. Judicial review of legislation is permissible on the ground of excessive restriction as against reasonable restriction which is also described as proportionality test. When Section 37, which is the rule making power, is clear that penalty can be imposed only when the assessee is guilty of intending to evade the payment of duty, the penalty cannot be imposed without such intention. Furthermore, even when intention may be there, the penalty must be reasonable and cannot, in all cases, be fixed at 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f non-alloy steel from its factory in the account-current maintained by it. In case, the assessee failed to pay the total amount of duty by the due date, it was also liable to pay penalty equal to the outstanding amount of duty or five thousand rupees, whichever was greater. The assessee was issued a show cause notice dated 26.8.2004 (Annexure A-1) for imposing penalty under Rule 96ZO(3) of the Central Excise Rules, 1944 (in short the Rules ) for having failed to discharge duty liability of Rs. 32,50,000/- within the prescribed time limit. The show cause notice was duly replied. The adjudicating authority vide order dated 24.8.2005 (Annexure A-2) directed for recovery of interest and also imposed the penalty of Rs. 16,75,000/- under Rule 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months, i.e. from January 2000 to March 2000, amounting to Rs. 15,00,000/- equal to the duty involved. Hence, the present appeal by the assessee. 4. Learned counsel for the assessee relied upon the decisions of the Gujarat High Court in Krishna Processors v. Union of India 2012 (280) ELT 186 and that of Himachal Pradesh High Court in Shubh Timb Steel Ltd. v. Union of India 2012 (286) ELT 495 wherein following the judgment of this Court in Bansal Alloys Metals (P.) Ltd. v. Union of India 2010 (260) ELT 343, the issue has been decided in favour of the assessee. 5. On the other hand, learned counsel for the revenue supported the order passed by the Tribunal. 6. After hearing learned counsel for the parties, we find merit in the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fundamental rights and is arbitrary. Moreover, exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default with intent to evade duty . 17. The writ petitions of the assessees are allowed and impugned provisions in Rules 96(ZO), (ZP) and (ZQ) permitting minimum penalty for delay in payment, without any discretion and without having regard to extent and circumstances for delay are held to be ultravires the Act and the Constitution. In CWP No.8555 of 2010, penalty has been sustained by the Tribunal to the extent of 100% which will stand quashed without prejudice to any fresh order being passed in accordance with law. It is made clear that if penalty ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal Alloys Metals (P.) Ltd's case (supra) had held in the following terms: '7. This issue was discussed threadbare by a Division Bench of the Punjab and Haryana High Court in the judgment cited above wherein after discussing the entire law, the Court held as follows: 15. Applying the above principles to the present situation, the provision for minimum mandatory penalty equal to the amount of duty even for slightest bonafide delay without any element of discretion is beyond the purpose of legislation. The object of the rule is to safeguard the revenue against loss, if any. The penalty has been provided in addition to interest. Mere fact that without mens rea, an can be punished or a penalty could be imposed is not a bla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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