2004 (5) TMI 84 - HC - Central Excise

High Court sets aside penalty for duty delay under Rule 96ZQ(5)(ii), emphasizes proportionate penalties.

The High Court set aside the penalty imposed for a 3-day delay in paying duty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944, emphasizing that ... Penalty - Quantum of - Independent processors - Delay in payment of duty Issues:Challenge to order imposing penalty for delay in paying duty under Rule 96ZQ(5)(ii) of Central Excise Rules, 1944.Analysis:The petition challenged the order imposing a penalty of Rs. 2,58,000 for a 3-day delay in paying duty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944. The High Court referred to a previous judgment where principles were laid down regarding penalties for delayed payments. It was emphasized that the penalty should not be disproportionate to the length of the delay and should not exceed three times the amount of interest levied. The Court noted that the penalty should be commensurate with the delay and past payment history. The judgment clarified that these principles applied specifically to penalties for delayed payment of duty under Rule 96ZQ(5)(ii) and not to penalties for other violations.The Court observed that it was unclear from the orders whether interest had been paid for the delayed duty payment under Rule 96ZQ(5)(i). The Court directed that if interest had not been paid, it should be computed and paid within one month. The details in the Order in Original showed that the delay was only 3 days, but neither the original nor the appellate authority had considered the extent of the delay in payment. Consequently, the Court set aside the orders imposing penalties and remanded the matter to the Deputy Commissioner for reevaluation of the penalty under Rule 96ZQ(5)(ii) in line with the principles established in the earlier judgment. The rule was made absolute to this extent with no order as to costs.