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of <h1>Tribunal overturns penalty for delayed duty payment citing High Court ruling</h1> <h3>Shree Sai Prasad Dyg. And Ptg. Mills Versus CC and CE, Surat</h3> Shree Sai Prasad Dyg. And Ptg. Mills Versus CC and CE, Surat - TMI Issues:Appeal against penalty imposed under sub-rule (3) of Rule 96ZQ for delayed payment of duty. Validity of rules under Notification 42/98. Binding effect of Madras High Court judgment on Mumbai Tribunal.Analysis:The appeal before the Appellate Tribunal CESTAT Mumbai involved challenging the penalty imposed on the appellant for delaying the payment of duty under sub-rule (3) of Rule 96ZQ. The Commissioner (Appeals) had confirmed the penalty, leading to the appeal. The Departmental representative mentioned a judgment by the Madras High Court in Beauty Dyers Vs. UOI 2002 (52) RLT 635, which held that rules issued under Notification 42/98 were ultra vires Section 3A of the Central Excise Act. The representative argued that the Tribunal in Mumbai was not bound by this judgment, citing a previous decision in CCE Vs. Kashmir Conductors 1997 (96) ELT 257. However, the Tribunal clarified that when there is an order of the High Court on a legal proposition, the Tribunal is bound to follow it.The Tribunal emphasized that all benches, including the one in Mumbai, were bound by the judgment of the Madras High Court in the absence of conflicting judgments from other High Courts. Therefore, the Tribunal concluded that the penalty imposed was unsustainable due to the High Court's decision setting aside the foundation for the penalty. As a result, the appeals were allowed, and the department was granted liberty to proceed against the appellant in accordance with the High Court's order.In summary, the Tribunal's decision was based on the binding effect of the Madras High Court judgment on Mumbai Tribunal, which led to the penalty being set aside. The case highlighted the importance of following High Court orders on legal propositions, ensuring uniformity in legal interpretation and application across different jurisdictions.
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