TaxTMI 
TaxTMI 
2006 (8) TMI 197
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....nder Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985 which were chargeable to duty up to 31-3-2000 in terms of Section 3A of the Central Excise Act, 1944 (in short, 'the Act') read with Notification No. 30/97-C.E.(N.T.), dated 1-8-1997. The assessee opted to pay duty on lump sum basis in terms of Rule 96ZO(3) of the Central Excise Rules, 1944 (in short, 'the Rules'). Monthly liability of the assessee was determined at Rs. 5 lacs, which was to be discharged into two instalments, first instalment by 15th of the month and second instalment by the last day of the month. During the month of December 1997, the assessee failed to discharge its liability. Show cause notice for recovery of Rs. 1,12.903/- with interest and penalty under Rule 96ZO(3) of the Rules was issued. After considering the defence of the assessee, the duty alongwith interest and penalty of Rs. 1,12,903/- was confirmed. The assessee preferred an appeal. The Commissioner (Appeals) reduced the penalty to Rs. 30,000/-. The Tribunal dismissed the appeal of the revenue following judgment of the Allahabad High Court in Pee Aar Steels (P) Ltd. v. Commissioner of Central Excise, Merrut, 2004 (170) E.L.T. 406, ....
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....the case may be, he shall be liable to, - (i) Pay the outstanding amount of duty along with interest thereon at the rate of eighteen per cent per annum, calculated for the period from the 16th day of such month or the 1st day of next month, as the case may be, till the date of actual payment of the outstanding amount; and (ii) a penalty equal to such outstanding amount of duty or five thousand rupees, whichever is greater : Provided that if the manufacturer fails to pay the total amount of duty payable for each of the months from September, 1997 to March, 1988 by the 30th day of April, 1998, he shall also be liable to pay a penalty equal to the outstanding amount of duty as on 30th day of April, 1998 or five thousand rupees, whichever is greater." 7. A bare perusal of the rule shows that the amount of compounded duty of Rs. 5,00,000/- per month determined under the Rules is to be paid into two equal instalments i.e. first instalment latest by 15th of the month and the second instalment latest by the last day of each month. Proviso of sub-rule (3) of Rule 96ZO provides that in case ....
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....IR 2005 SC 2846, State of M.P. v. Bala alias Balaram, AIR 2005 SC 3567, State of MP v. Sheshrao, AIR 2005 SC 4417. (Under Section 376 IPC). (g) In Madhukar Bhaskarrao Joshi v. State of Maharashtra, AIR 2001 SC 147. (h) Jagdish Prasad and another v. State of U.P., AIR 1999 SC 1539 (Under PFA Act, 1954). (i) State of J&K v. Vinay Nanda, AIR 2001 SC 611. (Under Corruption Act). (iv) Normally, awarding sentence was judicial function, where minimum sentence was not laid down (Dadu alias Tulsidas etc. v. State of Maharashtra, AIR 2000 SC 3203). (v) In a given case, minimum sentence could be held to be arbitrary and violative of Article 21 of the Constitution. (Mithu v. State of Punjab, AIR 1983 SC 473. Maneka Gandhi v. Union of India, AIR 1978 SC 597 and Sunil Batra v. Delhi Administration, AIR 1978 SC 1675). (vi) Reference was also made to judgments of Hon'ble the Supreme Court in Zunjarrao Bhikaji Nagarkar v. Union of India, 1....
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.... the amount of duty would be treated as mandatory minimum, if it can be held in a given case that duty had not been paid by reason of fraud, collusion, wilful misstatement or suppression of facts or in contravention of any of the provisions of the Act and the rules with intent to evade payment of duty. In other cases, penalty equal to duty cannot be held to be mandatory. Take a situation where there is one day delay in making the deposit and instead of paying the instalment by the 15th of the month, the instalment is paid on 16-7-2006. In such a case, if it is to be held that penalty equal to duty must be imposed, such an interpretation will be contrary to the very concept of penalty requiring mens rea, which will also be arbitrary and against the principle of fairness. 13. It may also be noticed that though, normally, element of mens rea is mandatory requirement before penalty can be imposed but it is not always so required. Reference may be made to the provisions of Section 271(1)(a) of the Income tax Act, 1961, prior to amendment in the year 1988, wherein penalty was provided for failure to furnish return. Considering the question of requirement of mens rea, the Hon'ble Supre....
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....tate of Callifornia, 402 US 183 : 28 LD 2d 711, that no formula of a foolproof nature is possible that would provide a reasonable criterion in determining a just and appropriate punishment in the infinite variety of circumstances that may affect the gravity of the crime. In the absence of any foolproof formula which may provide any basis for reasonable criteria to correctly assess various circumstances germane to the consideration of gravity of crime, the discretionary judgment in the facts of each case, is the only way in which such judgment may be equitable distinguished." 17. In Administrative law, the principles of exercise of discretion to ensure that a particular action is consistent with Article 14 of the Constitution, have been laid down. Referring to the principle of proportionality, it was held in Om Kumar and others v. Union of India, 2001 (2) SCC 386, Para 28 :- "28…..Under the principle, the court will see that the legislature and the administrative authority "maintain a proper balance between the adverse effects which the legislation or the administrative order may have on the rights, liberties or interests of persons keeping in mind the purpose which they wer....