Penalty under Rule 96ZP(3) treated as maximum only, with bona fide conduct supporting reduction.

Rule 96ZP(3) was treated as prescribing a maximum penalty rather than an automatic 100% levy. Because duty and interest were not disputed, and the assessee later deposited the duty with conduct indicating bona fides, the penalty was considered excessive at the full amount. The penalty was therefore reduced, while the remaining part of the order was maintained.

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Issues: Whether the penalty imposed under Rule 96ZP(3) was mandatory and liable to be sustained at the full amount, and whether the quantum of penalty required reduction in the circumstances.

Analysis: The duty and interest were not disputed and were upheld. On the penalty issue, the provision was treated as prescribing the maximum penalty, not an invariable 100% levy. Since the assessee had subsequently deposited the duty and the conduct showed bona fides, the case called for reduction of penalty rather than affirmation of the entire amount.

Conclusion: The penalty was reduced to Rs. 4,00,000 and the rest of the order was maintained.

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