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TMI Blog2008 (4) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Technical) and P.K. Das, Member (Judicial) Archana Pandey, Jt.CDR & Shri B.S. Suhag, DR, for the Appellant. V.Lakshmikumaran, Amcus Curiae for the Respondent. [ORDER] - This appeal has been referred to Larger Bench on the following question :- "Whether Rs.5000/- is a minimum penalty that is required to be imposed in terms of Rule 25 of the Central Excise Rules, 2002." 2. It may be stated at the very outset that Rs.5000/- was the penalty prescribed in Rule 173Q of the Central Excise Rules, 1944, corresponding to Rule 25 of the Central Excise Rules 2002. Rule 25 of the 2002 Rules provides for the (alternate) penalty of Rs.10,000/-. By amendment under Notification No.8/2007 dated 1.3.2007, effective from 11.5.2007, the amount Rs.2000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- applicable under Rule 173Q(1) for contravening Clause (a) is not called for, or sustained in this case, "the minimum penalty prescribed under Rule 173Q(1) of Rs.5,000/- is only required to be confirmed". Except the word 'minimum' there is nothing in the judgment to suggest that the Bench intended to lay down the law that Rs.5000/- is the minimum penalty which could be imposed under Rule 173Q. It is well settled that a judgment is an authority, and can be regarded as a precedent only on the point which was canvassed, debated and decided. Any observation or finding beyond the issue (s) raised can only be regarded as obiter dictum which may be binding only on the parties to the proceeding, but cannot be treated as a binding precedent. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions are "subject to the provisions of Section 11AC of the Act" i.e. Central Excise Act. Therefore, in order to construe the meaning and scope of the rule, it is necessary to look into the provisions of Section 11AC. Section 11AC-omitting the provisos- runs as under :- "Section 11AC. Penalty for short-levy or non-levy of duty in certain cases. - When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses (a), (b), (c) or (d) has been committed), or rupees five thousand, whichever is greater. Thus, where the duty determined against the person is more than rupees five thousand, the penalty shall not exceed amount of duty; where the duty is less than rupees five thousand, it shall not exceed that amount. In Kisan Sahkari Chini Mills Ltd. (supra) the Single Member Bench reached more or less the same conclusion while construing the provisions of Rule 173Q. It will be useful to quote the relevant observations in para 9 of the judgment in extenso as under :- "9.Rule 173(Q)(1)(a)of the said rules, inter alia, provides that if any manufacturer removes any excisable goods in contravention of any of the provisions of the said rules, then all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he maximum is to be taken as Rs. 5,000/- where the three times of the value of the excisable goods is below Rs. 5,000/- the discretion of the authority imposing penalty of any lesser amount is kept intact". 7. We are of the view that the amount mentioned in Rule 173Q(1) of the 1944 Rules or Rule 25(1) of the 2002 Rules is the maximum, and not the minimum, and the decisions in Sarjoo Sahkari Chini Mills and Manoj Jaiswal do not lay down the law correctly and they deserve to be overruled. We may observe that where a provision is capable of two interpretations and two views are possible, the one which is liberal and in favour of the assessee must be accepted. 8. Our conclusion is in accord not only with the express provisions of the rule bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of ten times the amount of entry tax stipulated therein is only the maximum amount which could be levied and the assessing authority has the discretion to levy lesser amount, depending upon the facts and circumstances of each case. Construing Section 7(5) in this manner, the decision of the High Court that Section 7(5) is ulta vires cannot be sustained". 10. From the above decisions it is clear that even where a minimum penalty is prescribed, the authority has discretion to impose a lesser penalty depending on the facts and circumstances of the case. It need hardly be emphasized that imposition of penalty is a penal action and therefore, there cannot be cut and dried formulae for quantifying the amount. The attending facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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