IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- CENTR.EXCISE APPEAL No. 24 of 2005 UNION OF INDIA V/S M/S HINDUSTAN PROCESSORS LTD & ANR Mr. Rishabh Sancheti on behalf Mr.VK MATHUR, for the appellant / petitioner Date of Order : 2.4.2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI SANGEET LODHA,J. ORDER ----- This appeal has been filed by the Revenue against the order of learned Tribunal, dated 22.1.04, holding that since the Madras High Court in the case of Beauty Dyers vs. Union of India, has held, that Rule 3A of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rule, 1998 and the notifications dated 10.12.98, 13.1.99, 1.3.2000 and another notification dated 1.3.2000, are ultra vires Section 3A of the Central Excise Act, and therefore, since, the provisions of these Rules, and notifications, under which, the penalty is imposed, have been declared ultra vires, imposition of penalty is not sustainable. The appeal was admitted by framing following substantial question of law:- “Whether the Tribunal was right in law in rejecting the order imposing the penalties under Rule 96(ZQ) of Central Excise Rules, 1944.” Learned counsel for the appellant has made available for our perusal the judgment of the Madras High Court in Beauty Dyers vs. Union of India(UOI)( S.B. Civil Writ Petition Nos.3249, 5746, 5747 and 19884 of 1999, decided on 20.12.01, by taking a print from the internet, and contended, that from perusal of this judgment, it is clear, that the Madras High Court has not declared these provisions ultra vires. Rather, all that has been said is, that the penalty mentioned in the Rules, should be taken only to be the maximum amount which would be levied, and the assessing authority has the discretion to levy lesser amount, depending upon the facts and circumstances of each case. In arriving at this decision, again a reference has been made to a judgment of the Hon'ble Supreme Court in State of Madhya Pradesh vs. Bharat Heavy Electricals, reported in 1998(99) E.L.T. 33, wherein also the Hon'ble Supreme Court was considering the provisions of Section 7 (5), and was not held to be ultra vires. 2 Thus, the logic applied by the learned Tribunal in setting aside the penalty, is only on the ground, that the Rules of 1998, and the notifications mentioned therein, have been declared ultra vires, while they have not been declared, the impugned judgment cannot be sustained. The appeal is consequently allowed. The impugned judgment is set aside and the matter is sent back to the learned Tribunal, to decide the appeal afresh, in accordance with law, as well as on merits. ( SANGEET LODHA ),J. ( N P GUPTA ),J. /aditya / 3