The omission of Section 3A of the Central Excise Act, 1944 without any saving clause does not affect pending proceedings, and penalties exceeding Rs.5000 are ultra vires and violative of the Constitution of India.

M.S. Sonak, J.

Heard Ms. A. Desai, learned Counsel for the appellant and Mr. Y. Nadkarni, learned Counsel for the respondent.

2. At the outset, an order was made in Excise Appeals No. 5/2006, 6/2006 and 7/2006 to the effect that the same shall not be placed before the Bench in which one of us (M.S. Sonak, J.) is a party.

3. The learned Counsel appearing for the parties however, state that there is no difficulty, if this Bench takes up the remaining Excise Appeals, since issues raised in these Excise Appeals, stand substantially covered by the ruling of the Hon'ble Supreme Court in the case of M/s Shree Bhagwati Steel Rolling Mills Vs. Commissioner of Central Excise and another (2015 AIR SCW 6453).

4. These two Appeals are directed against the order dated 23.10.2006 made by the Customs Excise & Service Tax Appellate Tribunal (CESTAT), whereby Appeal instituted by the respondent/ Assessee came to be allowed and the Appeal instituted by the appellant/Revenue for seeking enhancement of penalty imposed by the commissioner, came to be rejected.

5. In these matters, the Deputy Commissioner of Central Excise issued five show cause notices to the respondent/Assessee demanding central excise duty short paid under the provisions of 11A of the Central Excise Act 1944("said Act") read with Rule 96 ZO(3) of the Central Excise Rules 1944 ("said Rules").

6. By an order dated 28.8.2003, the Commissioner of Central Excise confirmed demand made in show cause notices; imposed penalties of Rs.1,00,000'-(Rupees one lakh only) each upon the Assessee in respect of show cause notices and ordered, respondent/Assessee to pay interest on the duties @18% per annum from the date of such amount became due and payable till the date of actual payment in terms of Rule 96ZO(3) of the said Rules.

7. The Assesseee thereupon instituted Excise Appeal No. E-3751/03 before the CESTAT impugning the Commissioner's order dated 28.8.2003 in its entirety. The appellant/Revenue also instituted Excise Appeal E/2971/2004 seeking enhancement of the penalty equivalent to the confirmed demand.

8. Vide impugned order dated 23.10.2006, CESTAT allowed the Appeal No.E/3751/2003 instituted by the respondent/Assessee but rejected the Appeal no. E/2971/2004 instituted by the Revenue. Hence, the present two appeals by the Revenue.

9. The reasoning of the CESTAT is reflected in paragraph 1 of the impugned order which reads thus :-

“After hearing Shri V. M. Doiphode, Ld. Advocate for the appellants and Shri Ajay Saxena, Ld. SDR for the revenue, we find that the demand of duty stands confirmed against the appellants vide the impugned order in terms of the provisions of Rule 96ZO(3). The said order was passed on 12/09/2003, when the provisions of Section 3A were omitted by Finance Act, 2001 without any saving clause. In terms of the Tribunal's decision in the case of Mitra Steel & Alloys Pvt. Ltd., and in the case of Kundil Alloys Pvt. Ltd., demands of duties could not be adjudicated under Rule 96ZO of Central Excise Rules, 1944, subsequent to omission of Section 3A, inasmuch as there was no saving clause. The entire case law was discussed by Banglore Bench of the Tribunal in the case of Vijaya Steel Ltd. Vs CCE, Bangalore-II (2006 (76) RLT 264 (CESTAT-Bang.), it was held that in view of the various judgments, show cause notice cannot be confirmed by the Commissioner when the provisions of law have been deleted. Inasmuch as in the present case the impugned order was passed subsequent to omission of Section 3A with effect from 18/05/2001, the impugned order confirming demand of duty is required to be set aside, in the light of the Tribunal's decision discussed supra. We, accordingly, allow the appeal filed by Shivan Ispat Pvt. Ltd.”

10. The appellant/Revenue has instituted Excise Appeal No. 4/2007 challenging the impugned order to the extent the same allows Assessee Appeal No.E/3751/2003 and Excise Appeal No.3/2007, to the extent, impugned order rejected Revenue's Appeal no. E/2971/2004.

11.