Hemant Gupta, J. - (1.) THE present appeal has been preferred under section 35G of the Central Excise Act, 1944 (for short the "Act") arising out of an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi on June 30, 2010 upholding the penalty to the extent of duty evaded under rule 96ZP(1) of the Central Excise Rules, 1944, in respect of compounded levy scheme. The appellant, herein, was served with two show -cause notices subsequent to physical verification of the dia of the rolling mill, i.e., gear box/pinion stand on August 21, 1999. The center to center distance was found as 261 mm. in respect of upper two pinions and as 258 mm. in respect of the lower two pinions as against the declared 245 mm. in the declaration dated September 1, 1997. The annual capacity of production of a mill is determined keeping in view the factors, i.e., "d", "n", V and "i". The authority found that the factors, "n" and "i" could not be checked/verified as the mill was not in working order but the factor "d" was found with variations and consequently, a show -cause notice as to why penalty under section 11AC of the Act be not imposed was issued. The stand of the appellant before the adjudicating authority was that semi -skilled persons working in their workshop have repaired the bushes and gears which led to variations in the "d" parameters. Considering the aforesaid explanation, the adjudicating authority vide the order dated June 27, 2006, imposed the penalty of Rs. 1,23,620 after re -determination of the production capacity.
(2.) SUCH order has been affirmed by the Tribunal vide the order dated June 30, 2010 but found that the compounded levy scheme is a separate and comprehensive scheme and that penalty is leviable under rule 96ZP(1) only. The learned counsel for the appellant has vehemently argued that the variations in "d" factor was due to wear and tear of the machinery and the said fact has been accepted by the Tribunal in its order dated June 30, 2010. Therefore, the penalty could not be imposed under rule 96ZP(1). It is also argued that 100 percent. penalty has been imposed upon the appellant without giving any reasons and such imposition of penalty runs counter to the judgment of this court in C.W.P. No. 18099 of 2009 Bansal Alloys and Metals P. Ltd. v. Union of India, (2013) 20 GSTR 566 (P&H) decided on November 8, 2010.
(3.) THIS court while issuing notice of motion found that the following two questions arise for consideration: (iv) Whether the Tribunal was correct in imposing penalty of an equal amount under rule 96ZP when the same had not been invoked in the show -cause notice? (v) Whether the Tribunal was correct in not giving the benefit of reduced penalty as per the proviso to section 11AC when the penalty was imposed initially under section 11AC more so when there has been no intentional act to evade payment of appropriate duty?;