Penalty for delayed monthly duty payment upheld despite provisional capacity fixation under excise rules.

Penalty under Rule 96ZP(3) was held leviable where a manufacturer failed to pay the full monthly duty by the stipulated date. The provisional nature of the order fixing annual capacity of production did not convert the assessment into a provisional assessment under Rule 9B, and the duty-liability order itself had not been challenged. The rule imposed liability for default in monthly payment and prescribed only a maximum penalty, so the penalty amount was not required to equal the duty short-paid; the quantum was reduced.

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Issues: Whether penalty was leviable for failure to pay the full monthly duty under Rule 96ZP(3) when the annual capacity of production had been fixed provisionally, and whether such provisional fixation excluded penalty.

Analysis: The manufacturer was liable to discharge duty on the basis of the annual capacity of production fixed by the competent authority. The provisional character of the order fixing capacity did not make the assessment provisional in the sense of Rule 9B of the Central Excise Rules, 1944, and the order fixing duty liability had not been challenged. The fourth proviso to Rule 96ZP(3) of the Central Excise Rules, 1944 made a manufacturer liable to penalty where the duty for any month was not paid by the stipulated date. At the same time, the rule prescribed only the maximum penalty, so the amount of penalty need not necessarily equal the duty short-paid.

Conclusion: Penalty was leviable; the assessee's challenge to penalty failed, but the quantum was reduced to Rs. 20,000/-.

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