Penalty for delayed duty payment requires mens rea; mechanical imposition was invalid where no fraudulent intention was found.

Penalty for delayed payment of duty under Rule 96-ZP(3) could not be sustained where it was imposed mechanically without any finding of fraudulent intention or mens rea. The assessee had admitted the duty liability and interest, and the delay was attributed to financial difficulty, so the interest payable neutralised any gain from the delay. On that basis, the absence of a mens rea finding was material to the validity of the penalty, and the penalty was set aside in favour of the assessee.

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Issues: Whether penalty imposed for delayed payment of duty under Rule 96-ZP(3) of the Central Excise Rules, 1944 could be sustained in the absence of a finding of fraudulent intention or mens rea.

Analysis: The penalty was imposed mechanically without examining whether the delay in payment of duty was accompanied by any fraudulent intention. The assessee admitted the duty liability and interest, and the delay was stated to have occurred due to financial difficulty. Since interest on delayed payment neutralised any financial gain from the delay, the absence of a finding of mens rea was material to the validity of the penalty.

Conclusion: The penalty could not be sustained and was set aside in favour of the assessee.

Ratio Decidendi: Penalty for delayed payment of duty cannot be sustained where it is imposed mechanically without a finding of mens rea or fraudulent intention.

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