Penalty for delayed duty payment under compounded levy upheld, with reduction granted where only part of the delay was satisfactorily explained.

Penalty under Rule 96ZQ(5) was held exigible for delayed duty payment under the compounded levy scheme. A one-day delay for the second fortnight was treated as satisfactorily explained because it resulted from an unexpected bank holiday, but a 16-day delay for the first half-month was not excused, as financial difficulty was not accepted as a valid justification for missing the prescribed payment schedule. Payment of interest did not displace the statutory penalty consequence. The penalty was therefore maintained, but reduced from Rs. 6 lakhs to Rs. 3 lakhs on the facts.

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Issues: Whether penalty under Rule 96ZQ(5) was exigible for delayed payment of duty under the compounded levy scheme, and whether the penalty required reduction on the facts of the case.

Analysis: Duty for the second fortnight was delayed by one day due to an unexpected bank holiday, and that delay was treated as satisfactorily explained. However, the delay of 16 days in payment of duty for the first half of the month was not satisfactorily explained, as financial difficulty was not accepted as a valid justification for non-compliance with the prescribed payment schedule. Rule 96ZQ(5) provided for penalty equal to the duty paid late, and payment of interest did not displace the statutory consequence.

Conclusion: Penalty was rightly imposable, but it was reduced from Rs. 6 lakhs to Rs. 3 lakhs.

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