ORDER
P.G. Chacko, Member (J)
1. One of these appeals is by the assessee and the other by the department During the material period, the assessee (manufacturers of MS Ingots) was working under the Compounded Levy Scheme (CLS, for short) in term of Section 3A of the Central Excise Act and was discharging duty liability in terms of Rule 96ZO of the Central Excise Rules, 1944 on the basis of Annual Capacity of Production (ACP, for short) determined by the jurisdictional Commissioner. They were liable to pay duty at the rate of Rs. 5 lakhs per month as fixed by the Commissioner. During the months of May, 1998, June, 1998, July, 1998 and October, 1998, their furnace had to be closed down due to power-cut from time to time. For these spells of non-operation of furnace, they submitted abatement claims in terms of Rule 96ZO(2) and these claims were allowed to the extent of Rs. 1,45,161/- for the month of May, 1998, Rs. 1,50,000/- for the month of June, 1998, Rs. 64,516/- for the month of July, 1998, Rs. 1,12,903/- for the month of October, 1998. The abatement orders of the Commissioner were received by the party in the last week of March, 1999 and in the first week of June, 1999. The duty liability for the above months was discharged only after receiving these orders. On the basis of this delay in payments, department proposed to impose penalty on the assessee under Rule 96ZO(3). The proposal was contested. The original authority imposed the maximum penalty (equal to total amount of duty) under the above provision. The first appellate authority reduced to Rs. 1 lakh. Still aggrieved, the assessee has filed Appeal Rs. E/953/2003. In Appeal No. E/942/2003, the department is challenging the reduction of penalty.
2. After examining the records and hearing both sides, I find that it is by now settled law that, under Rule 96ZO(3), a lesser penalty than the maximum prescribed there under could be levied, having regard to the facts and circumstances of the case. Ld. Counsel has cited the following decisions:
(i) Commissioner of Central Excise, Meerut v. Kukreti Steels Ltd. .
(ii) Commissioner of Central Excise, Chennai v. Thangam Steels Ltd. .
On the other hand, ld. SDR has relied on the Allahabad High Court’s judgment in PEE AAR Steels (P) Ltd. v. Commissioner of Central Excise, Meerut , wherein it was held that this Tribunal was not competent to reduce the penalty imposable under the 4th proviso to Rule 96ZP(3). Reliance has also been placed on the Tribunal’s decision in Allied Ferromelt Pvt. Ltd. v. Commissioner of Central Excise, Pune-II 2002 (149) E.L.T.237 (Tri.-Mumbai), wherein the penalty imposed on the party under Rule 96ZO(3) was upheld by this Tribunal observing that their plea for leniency on the ground of shortage of funds did not merit acceptance.
3. It is noticed that the penalty under consideration is one imposed under the 4th proviso to Rule 96ZO(3) which is pari materia to the 4th proviso to 96 ZP(3) considered by the High Court in PEE AAR Steels (supra), but the Hon’ble High Court’s ruling was not followed by this Tribunal in the case of Thangam Steels (supra). In view of the ruling of the apex court in the case of State of Madhya Pradesh v. BHEL . The apex court’s ruling has been consistently followed by this Tribunal and the same confers discretion on the Tribunal in the matter of determination of quantum of penalty to be imposed under provisions like Rule 96ZO(3) and Rule 96ZP(3). In the case of Allied Ferromelt (supra) cited by ld, SDR, the penalty imposed on the party was not reduced by the Tribunal. In that case, apparently, the Tribunal found that the conduct of the party was not clean. On the other hand, in the instant case, it appears, the assessee was waiting for the outcome of their abatement claims. They received one abatement order in March, 1999 and paid a major part of duty in the next month. They received another abatement order in June, 1999 and paid the balance amount of duty in 3 installments in August and September, 1999. On these facts, one can discern a reason for the delay of payments of duty and it will be unjustifiable to attribute to the party any intent to evade payment of duty. These are considerations which would weigh with the Tribunal in the exercise of the above discretion.
4. I have found an unexplained delay, albeit short, in the payment of duty by the assessee after receipt of the second abatement order of the Commissioner. In the circumstances, the assessee’s prayer for doing away with penalty cannot be accepted. Having considered all the facts and circumstances of the case, I am of the view that a penalty of Rs. 25,000/-(Rupees Twenty-five Thousands only) would suffice the purpose of Rule 96ZO(3). Accordingly, the impugned order is modified and the assessee’s appeal is partly allowed. Consequently, the department’s appeal challenging reduction of penalty to Rs. 1 lakh gets dismissed.
(Dictated and pronounced in open Court)