Penalty for non-payment of correct duty survives later payment of differential duty and interest.

Non-payment of the correct monthly duty after the furnace was treated as pusher type attracted penalty under Rule 96ZP(3)(ii), and subsequent payment of the differential duty with interest did not erase the default or the statutory consequence. The appellate authority was therefore not justified in deleting the penalty altogether, though the quantum could be adjusted on the facts. The order quashing the penalty was set aside and the penalty was restored.

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Issues: Whether penalty under Rule 96ZP(3)(ii) could be quashed merely because the differential duty and interest had been paid before the adjudication.

Analysis: The respondents had not paid the appropriate monthly duty after the furnace was treated as pusher type and the duty liability was reworked on that basis. Payment of the differential duty with interest at a later stage did not wipe out the default or nullify the statutory consequence attached to non-payment of the correct duty. The Commissioner (Appeals) was therefore not justified in setting aside the penalty altogether, though the quantum could be suitably modified having regard to the facts.

Conclusion: Penalty under Rule 96ZP(3)(ii) was held to be payable, and the order quashing it was set aside with penalty imposed.

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