1992 PLP 986 (SCMR)

ABDUL QADEER CHAUDHRY, J.‑‑‑This appeal by leave of the Court is directed against the judgment dated 22‑4‑1989 of the High Court.

2. The facts of the case are that the appellant failed to deposit the monthly instalments of Central Excise Duty on the basis of production capacity for the financial years 1972‑73, 1973‑74, 1974‑75 and 1977‑

78. The Assistant Collector of Central Excise, Faisalabad, issued notice to the appellant on 30- 11‑1978 to show cause why additional excise duty should not be recovered from him under rule 10 of the Central Excise Rules, 1944. The appellant replied to the show‑cause notice. The Assistant Collector on ‑ 12‑1‑1979 dismissed the representation of the appellant holding that they were liable to pay the amount as additional excise duty under rule 5(3) of the Production Capacity (Sugar) Rules; 1972. This order was maintained upto the Central Board of Revenue. His Constitution Petition was dismissed by the High Court by the impugned judgment. The High Court observed that the additional duty due or short paid tax was recoverable under rule 10 of the Central Excise Rules, 1944 and section 33 is not applicable. The learned counsel for the appellant raised the same contention which has been properly dealt with by the High Court. The main thrust of the argument of the learned counsel is that the demand made by the respondent is a penalty and unless it is adjudicated upon by a competent authority authorised under section 33 of the Act, no demand could be made from the appellant. This contention has no force. Rule 5 of the Excise Duty on Production Capacity (Sugar) Rules 1972 provides as under:‑‑

"5.(1) The annual amount of duty leviable in accordance with rule 3 for a financial year shall be paid in twelve equal monthly instalments. (2) The proper officer shall deliver to the manufacturer a demand notice for the amount of duty due from the manufacturer under these rules, indicating both the total amount of duty for the financial year and the amount of the monthly instalment. (3) The monthly instalments shall be paid by the last day of each month. If the full instalment of duty is not paid by the due date, the manufacturer shall, without prejudice to any other action that may be taken under the Act or the Central Excise Rules, 1944, but subject to the provisions of subsection (3) of section 37 of the Act, pay an additional duty of ‑ ‑ (a) 1% of the duty due if the payment is delayed by a month or part thereof; (b) 2% of the duty due if the payment is delayed by more than a month but not more than two months; (c) 3% of the duty due if the payment is delayed by more than 2 months but not more than three months; (d) 4% of the duty due if the payment is delayed by more than three months but not more than 4 months; (e) 5% of the duty due if the payment is delayed by more than 4 months but not mote than 4 months; (f) 6% of the duty due if the payment is delayed by more than 5 months but not more than 6 months; and (g) 10% of the duty due if the payment is delayed by more than 6 months." Sub‑rule (3) states that the monthly installments shall be paid by the last day of each month, and if the full instalment is not paid the manufacturer, shall pay the additional duty. This is a self‑executing provision. Liability has already been determined by the Rule. It clearly lays down that in case of default, an additional duty shall be paid. This is not a penalty. It is not to be adjudicated before a demand notice is issued. Sub‑rule (3) further provides that besides the additional duty any other action may be taken subject to the provisions of subsection (3) of section 37 of the Act. An action under section 37 is independent of the additional duty. It is not the case of the appellant that any other action has been taken against him. Section 37(3) of the Central Excises and Salt Act, 1944 reads as follows:‑

"

37. Power of Central Board of Revenue to make rules (1) xxx xx xx (2) xxx xx xx (3) In making rules under this section, the Central Board of Revenue may provide that any person committing a breach of any rule shall, without prejudice to any other action that may be taken against him under this Act, be liable to a penalty not exceeding two thousand rupees or ten times the amount of duty involved whichever is greater and that any article in respect of which any such breach is committed shall be confiscated."

4. According to section 37(3) of the Act, a penalty can be imposed. But no action in the present case has been taken under the Act. The appellant is manufacturing the sugar and is liable to the excise duty on production capacity. The additional duty has already been prescribed under rule 5(3) therefore, it does not need any adjudication as a penalty. Section 33 of the Act is, therefore, not applicable;

5. Learned counsel for the appellant submitted that abatements claims of the appellant are pending disposal before the respondent No.3, for a long time, therefore, the additional duty could not 'be recovered. The claim of the appellant is not co‑related with the additional duty claimed by the respondents in the present case. The learned counsel for the appellant has submitted that he had already deposited the additional duty but his case has not been disposed of by the respondents. The respondent No.3 is directed to dispose of the claim of the appellant as early as possible.

6. The appeal is disposed of having no merits. There will be no order as to costs. M.BA./C‑100/S Order accordingly.