Penalty for delayed compounded duty payment reduced where short delay was offset by interest and duty had already been discharged.

Penalty for delayed payment of compounded duty under Rule 96ZNC was held to be excessive where the duty had already been discharged, the delay was for short periods, and interest at 24% had been paid on the delayed remittances. On those facts, the penalty was treated as discretionary rather than automatic, and it was reduced from an amount equal to the duty to a fixed sum of Rs. 25,000.

---

---

Issues: Whether the penalty imposed for delayed payment of compounded duty under Rule 96ZNC was warranted in full or required reduction having regard to the short period of delay and payment of interest.

Analysis: The duty liability had been discharged and the delay was only for short periods. Revenue was compensated by payment of interest at 24% for the delayed remittances. In these circumstances, a penalty equal to the duty amount was considered excessive and not justified. The penalty was therefore treated as discretionary and amenable to reduction on the facts of the case.

Conclusion: The penalty was reduced to Rs. 25,000, and the assessee succeeded to that extent.

---