In a recent ruling, the Orissa High Court (HC) held that the penalty under section 96ZP of the Central Excise Act was not justifiable when Revenue Department delayed the computation of the Annual Capacity of Production (ACP).
M/s. Purvi Bharat Steel Ltd. questioned whether the levy of penalty was justifiable when the Revenue Department itself had delayed the computation of Annual Capacity of Production (ACP) which is the basis for computing the tax payable penalty imposed under Rule 96 ZP of the Central Excise Rules.
In Bhagwati Steel Rolling Mills v. Commissioner of Central Excise (2016) 3 SCC 643, whereinthe Supreme court 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.
A Coram comprising Chief Justice Dr S. Muralidhar and Justice M S Raman observed that the question of sustaining the penalty imposed thereunder against the Appellant does not arise since the Supreme Court has struck down Rule 96 ZP of the Central Excise Rules.
The court answered the questions in favour of the Appellant-Assessee and against the Department. Further, the Court set aside the impugned orders of the CESTAT and the corresponding orders of the First Appellate Authority and the Assessing Officer which imposed the penalty.
While allowing the petition the Court ordered to refund of the amount of penalty deposited within a period of twelve weeks.Mr Gautam Mukherji appeared on behalf of the petitioner and Mr Choudhury Satyajit Mishra appeared on behalf of the respondent.
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