Penalty for delayed duty instalment payment was held unsustainable where the monthly duty was already fully discharged.

Penalty for delayed payment of the first instalment of duty under Rule 96ZO was held unsustainable where the monthly duty liability had already been fully discharged and the delay was only a short postponement in remittance. The penalty matched the delayed instalment and interest was also levied, but the order gave no adequate basis for treating the lapse as warranting such a severe consequence. On those facts, the penalty was found unfair and was set aside.

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Issues: Whether the penalty imposed for delayed payment of the first instalment of duty under Rule 96ZO of the Central Excise Rules, 1944 was sustainable.

Analysis: The duty liability for the relevant month had already been discharged in full, and the delay related only to a short postponement in payment of the first instalment. The penalty imposed was equal to the delayed instalment and was accompanied by interest. The order did not disclose a sufficient basis for treating the lapse as warranting such a severe consequence, and the penalty was found to be unfair and unsustainable on the facts.

Conclusion: The penalty could not be sustained and was set aside.

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