2001 (12) TMI 94

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....884/99 are engaged in the process of cotton fabrics and man-made fabrics falling under Chapter 52, 54 and 55 of the Central Excise Tariff Act, 1985. The Central Government introduced a scheme enacting Section 3A of the Central Excise Act, 1944, to levy Excise duty on production capacity of the industry. 3.Exercising powers conferred under sub-section (3) of Section 3A read with Section 37 of the Central Excise Act, 1944, the Central Government made certain amendments to the Central Excise Rules, 1944. While doing such exercise, the Central Government inserted Rule 96ZQ under which the liability of the independent processor of textile fabrics to pay interest and penalty if the amount of duty on the specified date is paid. Under sub-rule (....

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....ies are not bound to levy fixed penalty equal to ten times the amount of entry tax whenever the provisions of Section 7(5) are attracted. Depending upon the facts of each case the assessing authority has to decide as to what would be the reasonable amount of penalty to be imposed, the maximum being ten times the amount of the entry tax. So construed, sub-section (5) of Section 7 cannot be regarded as confiscatory. Consequently, this also cannot be a ground for holding Section 7(5) to be ultra vires. From the aforesaid it follows that Section 7(5) has to be13. construed to mean that the presumption contained therein is rebuttable and secondly the penalty of ten times the amount of entry tax stipulated therein is only the maximum amount wh....