Saving provision preserves accrued excise liabilities and mandatory penalty under the compounded levy scheme despite later omission.

Omission of Section 3A of the Central Excise Act, 1944 did not extinguish duty and penalty liabilities that had already arisen from proceedings initiated under the compounded levy scheme, because Section 38A operated as a saving provision preserving accrued rights, liabilities, obligations, and pending proceedings. Delayed payment of dues determined under that scheme attracted penalty under Rule 96ZO of the Central Excise Rules, 1944 as a statutory consequence of the default, and mens rea was treated as irrelevant where the rule made the penalty mandatory. The stated ratio is that accrued liabilities survive statutory omission when saved, and scheme-based penalty can follow without proof of intent.

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Issues: (i) Whether omission of Section 3A of the Central Excise Act, 1944 and insertion of Section 38A of the Central Excise Act, 1944 wiped out liability for duty and penalty arising from proceedings initiated during the currency of the compounded levy scheme; (ii) Whether penalty under Rule 96ZO of the Central Excise Rules, 1944 was imposable for delayed payment of dues determined under the compounded levy scheme notwithstanding absence of mens rea.

Issue (i): Whether omission of Section 3A of the Central Excise Act, 1944 and insertion of Section 38A of the Central Excise Act, 1944 wiped out liability for duty and penalty arising from proceedings initiated during the currency of the compounded levy scheme.

Analysis: The relevant determination of annual capacity, the show-cause notice, and the demand proceedings all arose before deletion of Section 3A of the Central Excise Act, 1944. Section 38A of the Central Excise Act, 1944 was treated as a saving provision preserving prior rights, liabilities, obligations, and pending legal proceedings. On that basis, the omission of Section 3A did not extinguish liabilities already incurred under the scheme.

Conclusion: The liability survived the omission of Section 3A of the Central Excise Act, 1944, and the contention that all such liability stood wiped out was rejected.

Issue (ii): Whether penalty under Rule 96ZO of the Central Excise Rules, 1944 was imposable for delayed payment of dues determined under the compounded levy scheme notwithstanding absence of mens rea.

Analysis: The delay in payment of dues determined under the compounded levy scheme was treated as a clear violation of the scheme. Once the liability and delay were established, penalty followed as a statutory consequence under Rule 96ZO of the Central Excise Rules, 1944. Mens rea was held to be irrelevant to the imposition of such penalty.

Conclusion: Penalty under Rule 96ZO of the Central Excise Rules, 1944 was rightly imposable, and the challenge to penalty failed.

Final Conclusion: The decision affirmed continuance of liabilities and penal consequences in proceedings arising from the compounded levy regime, and the assessee's challenge to the penalty was unsuccessful.

Ratio Decidendi: Where proceedings, liability, and default arise during the operation of a statutory scheme, a subsequent omission of the enabling provision does not extinguish accrued liabilities or pending proceedings if a saving provision preserves them; in such a case, statutory penalty may be imposed according to the governing rule without proof of mens rea where the scheme makes the penalty mandatory.

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