Case Law Details
Purvi Bharat Steel Ltd. Vs Commissioner of Central Excise and Customs Bhubaneswar (Orissa High Court)
High Court held that as Supreme Court having struck down Rule 96 ZP of the Central Excise Rules in toto, the question of sustaining the penalty imposed thereunder against the Appellant does not arise.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. On 15th May, 2019 while admitting the present appeal the following questions were framed:
“(b)Whether levy of penalty was justifiable when the Revenue Department itself had delayed in computation of Annual Capacity of Production (ACP) which is the basis for computing the tax payable?
(d)Whether the levy of penalty can be justified on the sick industry?”
2. Admittedly, in the present case penalty was imposed under Rule 96 ZP of the Central Excise Rules. The said rule has now been struck down by the Supreme Court of India in the judgment in Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise (2016) 3 SCC 643, where in para 39 it was held as under:
“A penalty can only be levied by authority of statutory law, and Section 37 of the Act, as has been extracted above does not expressly authorize the Government to levy penalty higher than Rs.5,000/-. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make Rules 96ZO, 96 ZP and 96 ZQ without authority of law. We, therefore, uphold the contention of the Assessees in all these cases and strike down Rules 96ZO, 96ZP and 96ZQ insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Article 14, 19(1)(g) and are ultra vires the Central Excise Act.”
3. The Supreme Court having struck down Rule 96 ZP of the Central Excise Rules in toto, the question of sustaining the penalty imposed thereunder against the Appellant does not arise.
4. In that view of the matter, the questions are answered in favour of the Appellant-Assessee and against the Department. The impugned orders of the CESTAT and the corresponding orders of the First Appellate Authority and the Assessing Officer insofar as the penalty imposed on the Appellant is concerned, are hereby set aside.
5. The appeal is allowed in the above terms. The amount of penalty deposited shall be refunded to the Appellant in accordance with law within a period of twelve weeks from today.
