Tribunal Reduces Penalty for Delayed Duty Payment, Cites Precedents

The Tribunal reduced the penalty imposed on the appellant from Rs. 25,66,669 to Rs. 1,00,000 for failing to discharge duty liability by the due date under Rule 96ZO(3). The Tribunal held that the excise duty paid before the show cause notice justified a lower penalty, citing legal precedents allowing for discretion in penalty imposition for delayed duty payments.

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Issues:
- Imposition of penalty under Rule 96ZO(3) for failure to discharge duty liability by due date.

Analysis:
The appellant, a manufacturer of ingots and billets chargeable to central excise duty, was paying duty under the compounded levy scheme under Rule 96ZO(3). The Commissioner imposed a penalty of Rs. 25,66,669 on the appellant for failing to discharge the duty liability by the due date. The appellant challenged this order through an appeal.

The appellant's counsel argued that the Supreme Court in a previous case had left open the challenge to the vires of Rule 96ZO(3), and subsequent High Court judgments indicated that the adjudicating authority had the discretion to impose a lower penalty in cases of failure to discharge duty liability by the due date. The counsel contended that since the duty was paid after the due date but before the show cause notice was issued, the penalty imposed was not justified.

On the other hand, the Revenue's representative supported the impugned order, citing a Supreme Court judgment that emphasized the lack of discretion in reducing penalties under Rule 96ZO(3) and the requirement to impose penalties equal to the duty determined under the Central Excise Act.

After considering the arguments, the Tribunal noted that the Supreme Court had not addressed the vires of Rule 96ZO(3) in the judgment relied upon by the Revenue. The Tribunal also highlighted a High Court judgment declaring the rule excessive and unreasonable, allowing for the adjudicating authority to exercise discretion in imposing lower penalties for failure to discharge duty liability by the due date. Since the excise duty was paid before the show cause notice, the Tribunal found no justification for the penalty equal to the duty not paid within the due date. Consequently, the penalty was reduced to Rs. 1,00,000.

In conclusion, the Tribunal disposed of the appeal by reducing the penalty imposed on the appellant based on the principles of discretion in penalty imposition for delayed duty payments as established by relevant legal precedents and judgments.

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