2014 (10) TMI 598

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....vy scheme, the provisions of erstwhile Rule 96(ZO) permitting imposition of penalty equal to the amount of duty for delay in payment of duty, without any discretion and without having regard to the extent and circumstances of delay, could be held to be ultra vires of the Act and the constitution of India? (ii) Whether mandatory penalty equal to amount of duty on the assessee in case of violation of the provisions of erstwhile Rule 96(ZO) of the Central Excise Rules, 1944 could be waived or reduced at the discretion of any authority having regard to the extent and circumstances of delay in payment of duty? (iii) Whether provisions of Section 38A of the Central Excise Act, 1944 inserted by Section 131 of the Finance Act, 2001 (validation of....

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....n appeal before the Tribunal who vide order dated 25.7.2013 (Annexure A-2) allowed the appeal by relying on the judgment of this Court in Bansal Alloys & Metals (P.) Ltd. v. Union of India 2010 (260) ELT 343 (Punj. & Har.). Hence, the present appeal. 3. After hearing learned counsel for the appellant, we do not find any merit in the appeal. This Court in Bansal Alloys & Metals (P.) Ltd.'s case (supra) while deciding the question of vires of Rules 96ZO(3), 96ZP and 96ZQ of the Rules held the said provisions to the extent of providing for mandatory minimum penalty without mens rea and without any element of discretion as excessive and unreasonable restriction on fundamental rights being arbitrary and were accordingly declared to be ultra....

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....ving regard to extent and circumstances for delay are held to be ultravires the Act and the Constitution. In CWP No.8555 of 2010, penalty has been sustained by the Tribunal to the extent of 100% which will stand quashed without prejudice to any fresh order being passed in accordance with law. It is made clear that if penalty has attained finality as in CWP No. 18099 of 2009 upto this Court, this order will not affect the finality of such order. The appeals filed by the revenue against the orders of the Tribunal sustaining penalty proportionate to the default will stand dismissed.' 4. Following the aforesaid judgment in Bansal Alloys & Metals (P.) Ltd.'s case (supra), Gujarat High Court in Krishna Processors v. Union of India 2012 (....

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....uty even for slightest bonafide delay without any element of discretion is beyond the purpose of legislation. The object of the rule is to safeguard the revenue against loss, if any. The penalty has been provided in addition to interest. Mere fact that without mens rea, an can be punished or a penalty could be imposed is not a blanket power without providing for any justification. In the Indian Constitutional scheme, power of legislature is circumscribed by fundamental rights. Judicial review of legislation is permissible on the ground of excessive restriction as against reasonable restriction which is also described as proportionality test. 16. For the above reasons, we hold that the impugned provision to the extent of providing for manda....