Penalty for short duty payment not sustainable where differential liability arose from delayed abatement decision and interest was paid later.

Penalty under Rule 96ZO(3)(ii) was held unsustainable where the assessee, operating under the compounded levy scheme, had paid duty as initially determined and the later short payment arose only because the department decided the abatement claim belatedly. Once the Commissioner's order revised the liability, the assessee paid the differential duty with interest. On these facts, the delay was attributable to the delayed departmental determination rather than any default by the assessee, so the statutory basis for imposing penalty was not attracted.

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Issues: Whether penalty was leviable for short payment of duty when the shortfall arose because the abatement claim was decided belatedly by the department and the assessee made the differential payment with interest after the authority's order.

Analysis: The assessee had opted for payment of duty under the compounded levy scheme and had discharged the duty as initially determined. The short payment arose only after the abatement claim for the closure period was decided later by the Commissioner, which resulted in a revised liability. The differential amount was thereafter paid along with interest. On these facts, the delay in payment was attributable to the belated departmental decision and not to any default on the part of the assessee. In such circumstances, the statutory basis for penalty under Rule 96ZO(3)(ii) was not attracted.

Conclusion: Penalty was not sustainable and the assessee succeeded on the issue.

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