2006 (5) TMI 342 - AT - Central Excise

Tribunal adjusts penalty for duty payment delay, citing lack of intent, partially allowing assessee's appeal.

TIRUMALA ALLOYS & CASTINGS (P) LTD. Versus COMMR. OF C. EX., CHENNAI

TIRUMALA ALLOYS & CASTINGS (P) LTD. Versus COMMR. OF C. EX., CHENNAI - 2006 (205) E.L.T. 1170 (Tri. - Chennai) Issues:- Penalty imposed under Rule 96ZO(3) for delay in payment of duty after receiving abatement orders.Analysis:1. The case involved appeals by both the assessee and the department regarding the imposition of penalties under Rule 96ZO(3) of the Central Excise Rules, 1944. The assessee, a manufacturer of MS Ingots, operated under the Compounded Levy Scheme and discharged duty liability based on the Annual Capacity of Production determined by the Commissioner. The issue arose when the furnace had to be closed down due to power cuts, leading to delays in payment after receiving abatement orders from the Commissioner.2. The Tribunal examined precedents such as the Commissioner of Central Excise, Meerut v. Kukreti Steels Ltd. and Commissioner of Central Excise, Chennai v. Thangam Steels Ltd., which allowed for the imposition of penalties less than the maximum prescribed under Rule 96ZO(3) based on the circumstances of each case. The department cited the Allahabad High Court's judgment in Pee Aar Steels (P) Ltd. v. Commissioner of Central Excise, Meerut, emphasizing the Tribunal's discretion in imposing penalties under the rule.3. The Tribunal noted that the penalty under consideration was similar to the one in the Pee Aar Steels case but highlighted the Tribunal's consistent adherence to the Supreme Court's ruling in State of Madhya Pradesh v. BHEL, granting discretion in determining penalty amounts under provisions like Rule 96ZO(3). The Tribunal differentiated the current case from Allied Ferromelt Pvt. Ltd. v. Commissioner of Central Excise, Pune-II, where penalties were upheld due to the party's conduct, unlike the present case where delays were attributed to awaiting abatement orders.4. After considering the facts and circumstances, the Tribunal found an unexplained delay in duty payment by the assessee but recognized the absence of intent to evade payment. Consequently, the Tribunal modified the penalty to Rs. 25,000, stating that it would serve the purpose of Rule 96ZO(3). The assessee's appeal was partly allowed, while the department's appeal challenging the reduced penalty was dismissed.