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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 ..... e Commissioner, Central Excise Department, submits that the question is no longer res integra, inasmuch as in Commr. Of Cus. And Cen. Exc., Coimbatore Vs. Kannapiran Steel Re-Rolling Mills, 2011(263) E.L.T. 22(S.C.), decided on 02.12.2010, a two Judges Bench of the Hon'ble Supreme Court decided the same question, following the judgment of a three Judges Bench of the Court in Union of India and Others Vs. Dharmendra Textile Processors and Others, (2008) 13 SCC 369, and held as follows:- "8. Counsel submits that in the said decision what was interpreted by this Court was Rule 96-ZQ and Rule 96-ZO. Counsel also submits that what is applicable to the facts and circumstances of the present case is Rule 96-ZP which is also pari materia and identical with that of Rule 96-ZQ and Rule 96-ZO. 9. In order to appreciate the aforesaid contentions of the counsel appearing for the appellant, we have perused the provisions of Rule 96-ZP and compared the said provisions with that of Rule 96-ZQ and Rule 96-ZO. On such appreciation and comparison what we find is that the provisions of Rule 96-ZP are pari-materia and are identical with that of Rule 96-ZQ and Rule 96-ZO. 10. In Dharmendra's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is submitted that Dharmendra Textile Processors and Others(supra), case was explained in Union of India Vs. Rajasthan Spinning & Weaving Mills, 2009(238) E.L.T. 3(S.C.), in which the correctness of the view expressed in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr., 2007(8) SCALE 304, was considered, and with reference to Section 11AC of the Central Excise Act, 1944, it was held in paragraph 23 as follows:- "23. The decision in Dharmendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penaly must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharmendra Textile decides." 8.In paragraph 24 however the Supreme Court made it clear that what is stated by it in paragraph 23 in regard to the decision in Dharmendra Textile, in only in so far as Section 11AC is concerned. The Court did not make any observations with regard to the several other statutory provisions tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows:- "15. Applying the above principles to the present situation, the provision for minimum mandatory penalty equal to the amount of duty even for slightest bona fide 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 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. 16. Conclusion for the above reasons, we hold that the impugned provision to the extent of providing for mandatory minimum penalty without any mens rea and without any element of discretion is excessive and unreasonable restriction 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assessee can be punished or a penalty could be imposed, is a blanket power without any justification. The Court held the provisions of Rules 96ZO, ZP and ZQ, permitting penalty for delay in payment, without any discretion and without having regard to the extent and circumstances for delay, is ultra vires the Act and the Constitution. 14.We are informed that a Special Leave Petition has been admitted and notices have been issued against the judgment of Punjab & Haryana High Court in Bansal Alloys & Metals Pvt. Ltd. Vs. Union of India(supra). 15.An objection has been taken by learned counsel appearing for the Central Excise Department that the vires of the Rules have not been challenged by the assessee, and thus, in the appeal filed by the Department, the vires cannot be questioned that it violates the principles of proportionality, and is consequently violative of Article 14 of the Constitution of India. 16.We find substance in the contention of learned counsel appearing for the assessee that since the High Courts admini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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