TaxTMI 
TaxTMI 
2016 (4) TMI 104
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....he ground that the first appellate authority has set aside the penalties imposed on the respondent under the provisions of Rule 96ZQ(5)(ii) of Central Excise Rules, 1944. It is the case of the Revenue that the provisions of Rule 96ZQ are attracted in the case in hand as respondent have not paid the Central Excise duty as determined under annual capacity of production. 4. We find that the issue is no more res integra as Hon'ble High Court of Gujarat in the case of Krishna Processors vs. Union of India 2012 (280) ELT 186 (Guj.) struck down the provisions of Rule 96ZQ as ultra vires. The relevant paragraph where the ratio has been carved out by their Lordships is at paragraph 12, which respectfully is reproduced. "12. Mr. Y. N. Ravani, lear....
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....t be permitted to raise the contention regarding lapsing of provisions at this stage. Inviting attention to the relief claimed in the petition, it was pointed out that petitioners have only challenged the impugned order-in-original to the extent penalty is imposed under Rule 96ZQ(5)(ii) of the Rules. Rule 96ZQ is part of the Central Excise Rules. The Central Excise Rules are still in existence and are framed in exercise of powers under Section 37 and not Section 3A of the Act. Accordingly the power of enactment prescribed under Section 37 of the Central Excise Act, has its independent existence irrespective of Section 3A of the Act. 12.2 On the question of validity of Rule 96ZQ of the Rules, Mr. Ravani invited attention to the decision of....
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....bility arises on manufacture. It was submitted that under Section 3 of the Act, the assessee does not know what will be the liability in advance whereas in case of Section 3A of the Act, the assessee knows his liability well in advance. Rule 96ZQ has been framed keeping in mind this aspect. According to the learned counsel, Rule 96ZQ applies uniformly to those to whom Section 3A applies, viz., independent textile processors who are a class by themselves. Hence, there is no discrimination on the basis of such classification. 12.4 Mr. Ravani further submitted that the penalty cannot be said to be invalid on the ground of different periods for payment of duty. The defaulter is a class by himself. In the circumstances not providing separate ....
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....s also thought fit to impose penalty so that the amount which the Revenue is entitled to collect is paid by an assessee in time and the Government is not required to face any hardship. If the amount is not paid, it becomes difficult for the Government to run the administration. Therefore, this provision is to be invoked when the revenue is not paid by the assessee in time. The aforesaid two clauses operate in different fields and it is known that compensatory measures as well as measures for deterrent effect can be provided. The court found no difficulty in arriving at the conclusion that it is not possible to provide compensatory measures as well as measures which would deter the assessees. It was submitted that it is settled legal positio....
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.... (3) of Section 37 is an enabling provision and does not debar the Central Government from levying higher penalty. 12.7 It was further submitted that the scheme under Section 3A of the Act is itself unique. Reliance was placed upon the decision of the Supreme Court in the case of Hans Steel Rolling Mill v. Commissioner of Central Excise, Chandigarh, (2011) 3 SCC 748 = 2011 (265) E.L.T. 321, wherein it has been held that the compounded levy scheme for collection of duty for annual capacity of production under Section 3A of the Act and Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 is a separate scheme from the normal scheme for collection of central excise duty on goods manufactured in the country. This is a comprehe....