JUDGMENT: MR. MUHAMMAD ASLAM, TECHNICAL MEMBER.--(1). This appeal has been filed by M/s. Modern Paint Mills, Lahore against Order-in-Appeal No, 524/98 dated 29.8.1998 passed by the learned Collector of Appeals, Central Zone, Lahore.
2. Facts leading to this appeal are that although appellants' unit had been placed under the fixed tax scheme vide serial No, 56 of notification No, SRO 662(1)/95 with effect from 5.7.1995, yet they continued operating under the self-clearance procedure in terms of Section 3(1) of the Central Excises Act, 1994 which resulted in short payment of central excise duty of Rs, 1,88,047.
3. After due process of law, the learned Assistant Collector who adjudicated the case held them guilty of the charges enumerated in the Show-Cause Notice and ordered them to make good the payment of the aforesaid short-levied amount of Rs, 1,88,047 alongwith additional duty. In addition to this, he also imposed on them penalty of Rs, 25,000.
4. These orders were confirmed as such by the first appellate authority, hence this second appeal.
5. The stand of the appellants is two-fold:
(a) They could either continue operating under the self-clearance procedure envisaged in terms of Section 3(1) of the Central Excises Act, 1944 or switch over to the fixed tax scheme promulgated vide SRO 662(1)/95 dated 5-7-1995 read with section 3(8) ibid. The fixed tax scheme being optional could not be thrust upon them particularly when they had intimated all concerned that they would continue to pay duty at the rate of 10% ad valorem and not otherwise.
(b)The Show-Cause Notice was signed and issued by the Deputy Collector while the case has been adjudicated at the original stage by the Assistant Collector which is not only ultra vires of law but even otherwise against all canons of justice, fair-play and commonsense.
6. The prayer of the appellants is that the orders passed by Collector of Appeals be struck down and the liabilities created against them quashed.
7. The learned Departmental Representative, however maintains that the fixed tax scheme was mandatory and not optional and that the excise duty due from the appellants was Rs, 29,000 per month and not what they paid under the redundant system of charge on ad valorem basis. He has also placed on record the copy of the relevant notification to establish that the Assistant Collector was duly authorised to adjudicate all such cases at the given point of time. His plea is that as the orders passed are correct in law and on facts, the same be confirmed and the appeal rejected.
8. We: find that as the fixed tax scheme issued in terms of Section 3(8) of the Central Excises Act, 1944 was mandatory and not optional, the appellants could not continue operating under the system of self-clearance envisaged under the provisions of law contained in Section 3(1) ibid, even if they had intimated the Department thereto. The authorities concerned were, therefore, justified in determining the liabilities of the principal amount of excise duty of Rs, 1,88,047 alongwith additional duty against them. We confirm the action already taken in this behalf.
9. As to the penalty, we find that the same is rather quite excessive and harsh. We, therefore, reduce it from Rs, 25,000 to Rs, 2,000 (rupees two thousand only).
10.Orders appealed against are modified to the extent of reduction of penalty only.