Allahabad High Court
Pee Aar Steels (P) Ltd. vs Commissioner Of Central Excise on 2 April, 2004
Equivalent citations: 2004(93)ECC633, 2004(170)ELT406(ALL)
Bench: M. Katju, R.S. Tripathi
JUDGMENT
M. Katju and R.S. Tripathi, JJ.
1. This appeal under Section 35G of the Central Excise Act 1944 relates to the imposition of penalty on the appellant.
Heard learned counsel for the parties.
2. The appellant is engaged in the manufacture of steel products falling under Chapter 72 of the Central Excise Tariff Act, 1985. During the period 1997 to 31.3.2000 it was paying duty under the compounded scheme as contemplated under Section 3-A of the Central Excise Act, 1944.
3. A perusal of the impugned order of the Tribunal dated 8.8.2003 shows that central excise duty was to be paid by the appellant in accordance with the Rule 962P of the Central Excise Rules on the 10th day of every month. The appellant paid the duty for September and October 1999 on 5.11.1999 instead of paying it in September and October. Similarly, for the months of November and December 1999, the appellant paid the duty on 6.1.2000 instead of paying it by the 10th of the respective months.
4. The Fourth proviso to Rule 96ZP(3) of the Central Excise Rules provides that where a manufacturer fails to pay the duty by the 10th of the month he is liable to pay "(ii) a penalty equal to the amount of duty outstanding from him at the end of such month or 5,000 of rupees whichever is greater".
5. The submission of learned counsel for the appellant is that since the appellant has paid the duty and interest prior to the issue of the show cause notice the penalty should not be imposed. We cannot agree with this submission. The penalty has to be imposed whenever the manufacturer fails to pay the amount of duty for any month by the 10th of such month. This is the clear mandate of the fourth proviso to Rule 96ZP(3) of the Central Excise Rules. The imposition of penalty has nothing to do with the timing of the show cause notice.
6. In our opinion the CEGAT has been lenient by reducing the penalty which strictly speaking it could not do because the fourth proviso to Rule 96ZP(3) does not say that the 'maximum' penalty can be up to the amount of the duty outstanding. It says that the penalty would be equal to the amount of duty outstanding. Hence, the Tribunal has been over indulgent to the assessee by reducing the penalty, which it strictly speaking could not do.
7. The penalty mentioned in the fourth proviso to Rule 96ZP(3) is not the maximum penalty but the only penalty, and hence such penalty has to be levied whenever there is failure to pay the duty by the 10th of the month. However, since there is no cross appeal by the department we are not enhancing the penalty. Thus, there is no force in this appeal and it is dismissed.