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TMI Blog2015 (4) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty to an amount of interest, at ₹ 26,000 In the judgments cited by the Central Excise Department, the question of vires of the Rules was not considered. The judgments were rendered in view of Dharmendra Textile Processors' case(2008 (9) TMI 52 - SUPREME COURT ), which was later on explained in Union of India Vs. Rajasthan Spinning & Weaving Mills(2009 (5) TMI 15 - SUPREME COURT OF INDIA), and in which, it was clearly stated by the Supreme Court that the judgment in Dharmendra Textile Processors' case(2008 (9) TMI 52 - SUPREME COURT ), was relevant only for the purpose of Section 11AC of the Central Excise Act, and that so far as several other statutory provisions are concerned, the Court is not making any observations. - once the Rule has been declared ultra vires by the High Court, having competent jurisdiction to provide such determination, the same Rule cannot be relied on for the purposes of imposing penalty, equal to the amount of central excise duty of the relevant period. - Decided in favour of the assessee. - D.B. EXCISE APPEAL(CUSTA) NO.8/2005, D.B. EXCISE APPEAL(EXCIA) NO.25/2008, D.B. EXCISE APPEAL(CUSTA) NO.9/2005, D.B. EXCISE APPEAL(EXCIA) NO.11/2013 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been given. 11. After considering all the concerned aspects, this Court finally held that the plea that Rule 96-ZQ and Rule 96-ZO have a concept of discretion inbuilt cannot be sustained meaning thereby that the said Rules are mandatory and there is no discretion available for reducing the penalty. Provisions of Rule 96-ZP being identical and pari materia with that of Rule 96-ZQ and Rule 96-ZO, the ratio of the aforesaid decision rendered by Three Judges Bench is squarely applicable to the facats and circumstances of the present case. Consequently, we allow these appeals and set aside the order passed by the High Court as also by the Tribunal and restore the order passed by the adjudicating authority, leaving the parties to bear their own costs. 4.It is submitted that the judgment in Kannapiran Steel Re-Rolling Mills(supra), has been consistently followed by the Hon'ble Supreme Court in the matters of levy of penalty under Rules 96-ZO, 96-ZP and 96-ZQ of the Central Excise Rules, 1944 (for short, 'the Rules'). These Rules have been omitted since 11.05.2001, the penalties imposed under these Rules, however, were subject matter of consideration before the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Spinners Ltd.(supra), where distinction was sought to be drawn with reference to Union of India Vs. Rajasthan Spinning Weaving Mills(supra), as well as Commissioner of Customs and Central Excise Vs. Lanco Industries Ltd., 2009(13) SCC 448, the Supreme Court observed that a similar submission was made contending that there was no warrant for levy of penalty since the assessee had deposited balance amount of excise duty that was short paid at the first instance and that too even before the show cause notice was issued. The Tribunal upheld the contention, which was set aside by the Supreme Court in Union of India Vs. Rajasthan Spinning Weaving Mills(supra), and since the submission was of identical nature, it was only to be rejected in view of the findings recorded by the Court that once the section is held to be applicable in a case, the authority concerned would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. On a consideration of the factual position in that case, the Supreme Court held that the Tribunal was not justified in reducing the quantum of penalty, as penalty under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 has attained finality in CWP No.18099 of 2009 upto this Court, this order will not affect the finality of such order. The appeals filed by the revenue against the orders of the Tribunal sustaining penalty proportionate to the default will stand dismissed. 12.It is submitted that the Uttaranchal High Court in Commissioner, Customs Central Vs. M/s Amrit Varsha Ispat (P) Ltd., (Excise Appeal No.3/2010), decided on 11.10.2011, relying on Dharmendra Textile Processors and Others(supra), held that the Supreme Court in Dharmendra Textile Processors and Others(supra), had left the issue of vires of Rule 96ZO, open, to be dealt with by the High Court, which was eventually decided by the Punjab Haryana High Court in Bansal Alloys Metals Pvt. Ltd. Vs. Union of India(supra), and in which, it was held that there cannot be any equal amount of penalty without mens rea being established. In Bansal Alloys Metals Pvt. Ltd. Vs. Union of India(supra), the Punjab Haryana High Court held that Rule 96ZO imposes an unreaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these High Courts have consistently held that the provisions of Rules 96-ZO, 96-ZP and 96-ZQ of the Rules, in so far as they do not admit any discretion in levy of penalty, are ultra vires Article 14 of the Constitution of India, and that a Special Leave Petition against the judgment has not been decided so far, the Rules declared ultra vires, cannot be relied by the Department of Central Excise to submit that there is no inbuilt discretion under these Rules, and thus, penalty in view of Dharmendra Textile Processors and Others' case(supra), must be levied, equal to the amount of duty of the relevant period. 17.In the present case, the assessee, engaged in the manufacturing of M.S. Ingots/Billets of Non Alloy Steel, was in default of Rule 96-ZO(3) of the Rules for delay in depositing the duty, which was paid on later dates. The show cause notices were issued under Rule 96-ZO(3) and 209 of the Rules, in which the demand of interest amount of ₹ 24,095/- was liable to be paid, at the same time, attracting violation of the Rule 96-ZO(3) of the Rules, a penalty of ₹ 57 lacs was imposed by the order-in-original. 18.In appeal, the Commissioner(Appeals-I), reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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