Hon’ble Surya Prakash Kesarwani, J.—We have heard Sri R.C. Shukla, learned counsel for the appellant and Sri Arvind Shikariya holding brief of Sri Piyush Agarwal, learned counsel for the respondent-assessee.

2. This Central Excise Appeal has been filed raising following substantial question of law:

“whether under the facts and circumstances of the case penalty equal to the amount of the duty under Rule 96ZP (3) of the Central Excise Rules, 1944 is leviable on the respondent”?

3. Learned counsel for the appellant submits that the substantial question of law raised in this appeal is covered by the decision of Hon’ble Supreme Court in the case of Commissioner of Customs and Excise and v. Kannapiran Steel Re-Rolling Mills, 2011 (263) ELT 22 (SC) and Commissioner of Central Excise, Mumbai, 2011 (267) ELT 438 (SC)

In the light of the above judgments he submits that the penalty under Rule 96ZP (3) of the erstwhile Central Excise Rules, 1994 (hereinafter referred to as ‘the Rules’) is mandatory and, therefore, the Tribunal should not have imposed penalty equal to the amount of duty. He further submits that even though Rule 96ZP (3) was omitted in the year 2001 but since the show-cause notice was issued to the respondent prior to the date of omission and, as such, the proceedings shall not lapse in view of provisions of Section 38A of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’).

4. Learned counsel for the respondent submits as under:

(i) Rule 96ZP (3) was omitted by notification No. 6 of 2001 and CE (N.P.) dated 11.5.2001 without any saving clause and, therefore, the appellants could not have passed the order in original dated 13.11.2003. He submits that the provisions itself was not available as on the date on which the order was passed by the adjudicating authority.

(ii) Rule 96ZP was enacted by the Central Government in exercise of powers conferred under Section 37 (3)/(4) of the Act and, therefore, even if it is found that the penalty proceedings were saved by Section 38A of the Act yet in the absence of any intention to evade of payment of duty, no penalty could have been imposed.

(iii) The provisions of Rule 96ZP (3) were declared ultra vires by different High Courts and, therefore, no penalty was leviable. Under the circumstances, even if part of penalty has been sustained by the Tribunal, the order cannot be interfered with in this appeal. In support of his submissions he relied upon various judgments.

5. We have considered the submissions of learned counsel for the parties and perused the record.

6. Briefly stated the facts of the present case are that the respondents are engaged in the manufacture of M.S. Bar falling under Chapter sub heading No. 7214.90 of the schedule to the Central Excise Teriff Act, 1985. They opted for compounded levy scheme under Rule 96ZP (3) of the Rules for full and final discharge of their duty liability based on annual capacity of production. As per provisions of Rule 96ZP the payment of duty was required to be made on monthly basis by the 10th day of the month. For the months of August, 1999 to December, 1999 the Central Excise Authorities found that the respondent deposited the excise duty after few days of the due dates, alongwith interest. On these facts, the show-cause notice was issued by the Superintendent of Central Excise Range IV Muzaffar Nagar dated 29th February, 2000 requiring the respondent to show caue that why penalty equal to the amount of duty be not imposed under Rule 96ZP (3) of the Rules for delayed payment of duty. Another show-cause notice dated 18th April, 2000 was issued due to delay of few days in depositing the amount of duty for the months of January, February and March, 2000. The said show-cause notices were adjudicated and an order in original dated 13.11.2003 was passed by the Assistant Commissioner of Division I Meerut imposing penalty of Rs. 13,30,000/- under Rule 96ZP (3). Being aggrieved the appellant as well as the respondent asses