Penalty under Rule 96ZP(1)(c) fails where duty with interest was paid before the statutory deadline.

Penalty under the proviso to Rule 96ZP(1)(c) of the Central Excise Rules, 1944 was not attracted because the manufacturer had paid the outstanding duty with interest before 30 April 1998. The operative precondition for penalty was failure to pay by that date, and that condition was not met on the facts recorded. The earlier issue of a demand notice did not cure the defect in invoking the penalty provision. Substitution of the rule by Notification No. 7/98-C.E. (N.T.) did not change the result on those facts, so the penalty was set aside.

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Issues: Whether penalty imposed for delayed payment under the proviso to Rule 96ZP(1)(c) of the Central Excise Rules, 1944 was sustainable where the outstanding amount had been paid with interest before 30 April 1998.

Analysis: The proviso applicable for the relevant period specifically provided for penalty where the manufacturer failed to pay the duty by 30 April 1998. The record showed that the remaining amount was paid on 31 March 1998 with interest, and the demand notice had already been issued earlier. On these facts, the precondition for invoking the penalty provision was not satisfied. The subsequent substitution of the rule by Notification No. 7/98-C.E. (N.T.) did not alter the result on the facts found.

Conclusion: The penalty could not be sustained and was liable to be set aside in favour of the assessee.

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