Mandatory penalty for delayed excise duty payment under Rule 96-ZQ(5)(ii) excludes reduction for short delay or hardship.

Rule 96-ZQ(5)(ii) treated delayed payment of central excise duty as attracting statutory interest and a penalty equal to the outstanding duty once default occurred. The provision was read as mandatory after the 27 February 1999 amendment, leaving no discretion to reduce the penalty on equitable grounds. Short delay and financial hardship were held irrelevant to the quantum of penalty, and the earlier discretionary view was not followed in light of later Supreme Court authority. The operative effect is that adjudicating authorities must impose the prescribed penalty in full where the rule itself fixes the consequence of default.

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Issues: Whether penalty for delayed payment of duty under Rule 96-ZQ(5)(ii) of the Central Excise Rules, 1944 was mandatory and whether the assessee's short delay and financial difficulty could justify reduction of the penalty.

Analysis: The liability under Rule 96-ZQ(5) was treated as obligatory once duty was not paid by the due date. The wording of the rule, especially after the amendment effective from 27 February 1999, showed that interest and penalty followed as statutory consequences of default and that the penalty was to be equal to the outstanding duty. The provision left no discretion with the adjudicating authority to reduce the penalty on equitable considerations. The short period of delay and the assessee's financial constraints were therefore held to be irrelevant to the quantum of penalty. The earlier view allowing discretion was declined to be followed in light of the later Supreme Court ruling.

Conclusion: The penalty was held to be mandatory, and the plea for reduction based on short delay or financial hardship was rejected.

Ratio Decidendi: Where the governing fiscal rule prescribes a penalty equal to the duty outstanding upon default, the authority has no discretion to reduce it on considerations of hardship or the brevity of delay.

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