2011 (5) TMI 780

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....ral Excise duty under Chapters 52 and 55 of the Central Excise Tariff. During the period of dispute, they had opted for discharge of duty liability under Compounded Levy Scheme of Rule 96ZQ of Central Excise Rules, 1944. The monthly duty liability based on their Annual Capacity of Production had been determined by Jurisdictional Commissioner under the provisions of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998. The department issued a show-cause notice dt. 20th December 2000 alleging that they have not discharged full duty liability during the period from December 99 to February 2000 and accordingly demanded duty of Rs. 8,49,000/- along with interest and also sought imposition of penalty of equal a....

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.... 1998, themselves have been held to be ultra vires of Section 3A of the Central Excise Act, and as such the Commissioner's order fixing the duty liability based on annual capacity of production is invalid, the question of penalty doesn't arise, that in the case of Valson Dyeing Bleaching & Printing Works v. Commissioner of Customs and Central Excise, Mumbai-III reported in 2010 (259) E.LT. 33 (Bom.) (sic), the duty demand had been confirmed by the Commissioner against the M/s. Valson Dyeing Bleaching & Printing Works, based on Commissioner's Annual Capacity Determination order issued under Hot Air Independent Textile Processors Annual Capacity Determination Rules, 1998, and penalty had been imposed, but following the judgment of Hon'ble Mad....

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....009 (243) E.L.T. 372 (Tri.-Del.), wherein an identical issue was involved, has upheld the imposition of penalty equal to the duty amount outstanding under Rule 96ZQ(5)(ii) of Central Excise Rules and in this judgment, the Tribunal also considered the judgment of Hon'ble Madras High Court in the case of Beauty Dyers v. Union of India (supra) and observed that Hon'ble Madras High Court's decision in the case of Beauty Dyers (supra) has nowhere held that sub-rule (5) of Rule 96ZQ to be ultra vires and that in view of this, there is no infirmity in the Commissioner's order imposing penalty equal to the outstanding duty amount under Rule 96ZQ(5)(ii). 6. We have carefully considered the submissions from both the sides and perused the reco....