Central excise duty default under the fortnightly scheme can justify penalty, with quantum remanded for reconsideration.

Failure to pay central excise duty within the prescribed fortnightly schedule attracted penal consequences, and financial difficulty arising from lockout or strike was not accepted as a sufficient excuse for breach of the statutory payment regime. Subsequent payment of duty with interest did not remove the basis for penalty, although the assessee's conduct remained relevant to the extent of penalty. The matter therefore required reconsideration only on quantum, with a fresh hearing before the Commissioner (Appeals).

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Issues: Whether penalty was exigible for failure to pay central excise duty within the prescribed time under the fortnightly payment scheme, and whether the matter required reconsideration only on the quantum of penalty.

Analysis: The delay in payment of duty was not treated as excusable merely because the unit was under lockout or strike, since financial difficulty by itself was not accepted as a ground to avoid penal consequences for breach of the statutory duty-payment regime. The finding that there was no willful contravention was not upheld. However, as the assessee had subsequently discharged the duty with interest, the appropriate course was to re-examine the extent of penalty after considering the conduct of the assessee and hearing both sides.

Conclusion: Penalty was held to be warranted in principle, but the matter was remanded to the Commissioner (Appeals) for reconsideration of the quantum of penalty.

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