Law: Central Excise Rules, 1944

Section: 226,9,52,52A,241,246,210,244

Central Excise Rules, 1944 - Rule 226 - Penalty - Imposition of - Provisions of rule 226, provided imposition of penalty to the extent of Rs. 2000/- or at the rate of 10 times the duty evaded - Deputy Collector, Central Excise and Sales-tax levied penalty Rs. 2,00,000/- with the direction to find out that any evasion of duty had taken place - Order for imposition of penalty -- Whether without lawful authority and of no legal effect - Held yes - On a proper analysis of sub-rule 1 of rule 226 of the Central Excise Rules, 1944 which has been reproduced above, it becomes apparent that it provides for imposition of penalty of Rs.2000/- at the maximum or ten times the amount of duty evaded. In the impugned order, there is no quantification of the duty involved or evaded. The only penalty which could be imposed upon the petitioner was of Rs.2000/-. lf the Deputy Collector wanted to exercise the other option available to him i.e. levying penalty at the rate of 10 times the duty evaded, that was only possible after the amount of duty had been calculated and determination. The impugned order shows that the Deputy Collector did not make any such determination and remitted the matter to the Superintendent, Excise, City Circle, Faisalabad with direction to conduct comprehensive audit and to find out that any evasion of duty had taken place due to the manipulation of the record. Without such determination no penalty in excess of Rs. 2,000/- could be levied. As a result of what has been stated above, this petition is allowed; the impugned order to the extent of levy of penalty in excess of Rs.2,000/- is declared to be without lawful authority and of no legal effect. JUDGMENT The Judgment of the Court was delivered by Malik Muhammad Qayyum, J. - On 19.1.1992, the Deputy Collector, Central Excise and Sales Tax, Faisalabad called upon the petitioner to show cause as to why it be not proceeded against for having violated rules 9, 52, 52-A, 241, 246, 210 and 226 of the Central Excise Rules 1944. The petitioner contested this notice by filing a reply. However, on 24th July, 1992, the Deputy Collector held the petitioner guilty of violation of the aforesaid rules and imposed a…

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