ORDER
V.K. Agrawal, Member (T)
1. Revenue has filed the present Appeal against Order-in-Appeal No. 376/04 dated 28-5-04 by which the Commissioner (Appeals) has reduced the penalty from Rs. 22.87 lakhs to Rs. 1.5 lakh. When the matter was called, no one was present on behalf of respondents M/s. Rana Steels, Shri Alok Arora, learned Advocate has requested for adjournment of hearing on account of some personal difficulty. As the appeal relates only to the enhancement of penalty, we take up the Appeal for disposal after hearing Shri H.C. Verma, learned Departmental Representative and after perusing the records.
2. M/s. Rana Steels manufactured MS rounds, MS bar, channels, angles etc. which attracted Central Excise duty on the basis of annual capacity of production under Section 3A of the Central Excise Act during the relevant period. The Additional Commissioner, Central Excise confirmed the demand of duty amounting to Rs. 22.87 lakhs and imposed equivalent amount of penalty besides directing them to pay interest at the rate of 18% as the respondents had not discharged their duty liability on the basis of annual capacity of production fixed by the Commissioner. The Commissioner (Appeals), under the impugned order, had confirmed the demand of duty but reduced the penalty observing that they had not discharged their duty liability in time due to financial constraints and major part of duty was deposited even before the issue of show cause notice and the balance amount of duty was paid during pendency of the Adjudication proceedings along with interest on delayed payment. The Commissioner (Appeals) has relied upon the decision of the Madras High Court in the case of Beauty Dyers v. Union of India [2004 (163) E.L.T. 28 (Mad)] wherein it has been held that penalty mentioned in Rule 96ZQ of the Central Excise Rules, 1944 is only the maximum amount and the assessing officer has the discretion to levy lesser amount of penalty. Learned Departmental Representative has contended that Rule 96ZP(3) of the Central Excise Rules provides that where a manufacturer fails to pay the whole of the amount of duty by the stipulated date, he shall be liable to pay the penalty equal to the amount of duty outstanding from him at the end of the month or Rs. 5,000/- whichever is greater. His contention is that the amount of penalty imposable on the defaulter is equivalent to the amount of duty not deposited. He has also relied upon the decision in the case of Pee Aar Steel Ltd. v. CCE Meerut [2004 (170) E.L.T. 406 (Allahabad)].
3. We have considered the submissions of both the sides. It is not in dispute that the respondents had not discharged the duty liability within the time limit stipulated in Rule 96ZP of Central Excise Rules, 1944. Accordingly, the penalty is to be imposable on the respondents. The Revenue has placed reliance on the decision in the case of Pee Aar Steel Pvt. Ltd. wherein Allahabad High Court has held that penalty mentioned in Rule 96ZP(3) is not the maximum penalty but the only penalty and hence such penalty is to be levied whenever there is failure to pay the duty by the 10th of the month. The phrase “the penalty equal to the amount of duty” came up for consideration of the Supreme Court in the case of State of Madhya Pradesh v. BHEL [1998 (99) E.L.T. 33 (S.C.)]. It has been held by the Supreme Court that penalty stipulated in the Act is only the maximum amount which could be levied and the assessing Authority has the discretion to levy lesser amount, depending upon the facts and circumstances of each case. Similar views has been expressed by the Madras High Court in the case of Beauty Dyers (supra) wherein the Madras High Court relying upon the decision of the Supreme Court and BHEL has held that the penalty mentioned in the above said Rules should be taken as only maximum amount which will be levied and the assessing Authority has discretion even to levy lesser amount depending upon the facts and circumstances of each case. It has not been disputed by the Revenue that the respondents had not discharged the duty liability on account of financial hardship and they had discharged the duty liability even before the show cause notice and balance before the Adjudication proceedings were over. In addition they had also paid the interest at the rate of 18%. In view of these facts, we do not find any reason to interfere with the impugned order and reject the appeal filed by the Revenue.