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TMI Blog2008 (4) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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/- has been substituted for Rs. 10,000/-. Reference to the amount or the rule in the reference order (supra) or in this order hereinafter may be understood accordingly mutatis mutandis. 3. The issue has been referred to Larger Bench in view of two conflicting decisions of the Single Member Bench in CCE, Lucknow v. Kisan Sahkari Chini Mills Ltd. - 2006 (193) E.L.T. 365 (Tribunal) and CCE, Lucknow v. Sarjoo Sahkari Chini Mills - 2006 (204) E.L.T. 478 (Tribunal). In the former it was held that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The decision in Bharat Petroleum Corporation Ltd. (supra), rendered by a Division Bench, therefore, cannot be treated as a precedent on the point. 4. Rule 25(1) of the Central Excise Rules, 2002 may be quoted at this stage in extenso as under :- "Rule 25. Confiscation and penalty. - (1) Subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer,- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 wilful 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-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined." On a plain reading it is manifest that where a case of fraud etc. is proved, the person is also liable to pay a penalty "equal to the duty" determined. On a combined reading of Section 11AC of the Act and Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 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)(l)(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 such goods shall be liable to confiscation and the manufacturer shall be liable to a penalty not exceeding three times the value of the excisable goods or Rs. 5,000/- whichever is greater. This would mean that penalty that can be imposed under the said provisions, will not be more than thrice the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 but also in consonance with the general principles. In Hindustan Steel v. State of Orissa - 1978 (2) E.L.T. 159, the law relating to penalty in cases of breach of statutory obligations was stated in these words :- " 7 ....An order imposing penalty for failure to carry out a statutory obligation is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision 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 circumstances, nature and gravity of the offence, defence of the person and the extent of evasion among other things will have to be taken into account in doing so. 11. It is not necessary to multiply decisions which are available in plenty. We wind up this discussion holding that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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