2011 (10) TMI 51

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....tral Excise, Meerut about their intention to avail the procedure prescribed under Rule 96ZO (3) of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules') for full and final discharge of their liability to pay duty on the manufacture of ingots of non-alloy steel under the provisions of 3A of the Central Excise Act, 1944.   It transpires that the Commissioner, Central Excise, by an order dated 19th September, 1997 fixed the annual capacity of production of the respondent company under Induction Furnace Capacity Determination Rules, 1997 at 9600 M.T. which was based on the total installed furnace capacity of 3 M.T. On the basis of this assessment, the monthly duty liability of the respondent company came to Rs. 5,00,000/....

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....Revenue, being aggrieved by the aforesaid orders, has filed the present appeal u/S 35 G of the Central Excise Act, 1944. Heard Shri Shobhit Saharia, the learned counsel for the appellant and Shri Aalok Arora, the learned counsel for the respondent company.   The only contention raised by the learned counsel for the appellant is that Rule 96ZO (3) (ii) does not provide any discretionary power to the authority to reduce the penalty and, in support of his submission, the learned counsel placed reliance upon a decision of the Supreme Court in Union of India Vs. Dharamendra Textile Processors and others (2008) 13 SCC 369, wherein, the Supreme Court held that mens rea was not an essential ingredient and that there was no scope for levying p....

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....deration. The learned counsel for the appellant candidly conceded that the judgment of the Punjab and Haryana High Court in Bansal Alloys & Metals Pvt. Ltd. (Supra) has not been stayed as yet by the Supreme Court of India.   In the light of the aforesaid stand taken by the rival parties, the Court finds that the Supreme Court in the case of Dharamendra Textile Processors (Supra) had left the issue of the vires of Rule 96ZO open to be dealt with by the High Court which was eventually decided by the Punjab and Haryana High Court in Bansal Alloys & Metals Pvt. Ltd. (Supra), in which, it was held that there can not be any equal amount of penalty without mens rea being established. We have gone through the judgment of Punjab and Haryana Hi....