Rule 96ZQ penalty is valid, but the maximum acts only as a ceiling and lesser penalty may be imposed on facts.

Rule 96ZQ of the Central Excise Rules, 1944 was treated as a valid penalty provision under the Central Excise Act, 1944, and the maximum prescribed amount was construed as a ceiling rather than an automatic levy. The assessing authority retained discretion to impose a lower penalty depending on the facts. Because duty and interest had already been paid, reduction of penalty was warranted on the facts, and the penalty was reduced to 10% of the duty amount in each case.

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Issues: Whether penalty under Rule 96ZQ of the Central Excise Rules, 1944 was sustainable and whether the penalty could be reduced below the maximum prescribed amount.

Analysis: The impugned appellate order had proceeded on a contrary High Court view, but the decision was tested against the jurisdictional High Court authorities which upheld the validity of Rule 96ZQ as authorising penalty under the Central Excise Act, 1944. The rule was treated as prescribing a ceiling, leaving discretion with the assessing authority to impose a lesser penalty depending on the facts. As the duty and interest had already been paid, reduction of penalty was warranted on the facts of the case.

Conclusion: Penalty under Rule 96ZQ was valid, and the original orders were restored with the penalty reduced to 10% of the duty amount in each case.

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