Mandatory penalty under compounded levy rules applies for delayed duty payment, with no discretion to reduce or waive it.

Rule 96ZO(3) under the compounded levy scheme treated delayed payment of monthly duty as attracting mandatory liability to pay the outstanding duty with interest and a penalty equal to the duty or five thousand rupees, whichever is greater. The text states that no discretion exists under the rule to reduce or waive the statutory penalty, and it relies on the Supreme Court's view under Rules 96ZO and 96ZQ that such penalty provisions are mandatory. On that basis, the Commissioner (Appeals) was not justified in setting aside the penalty, and the adjudicating authority's penalty was restored.

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Issues: Whether penalty was leviable under Rule 96ZO(3) for delayed payment of the first instalment of duty under the compounded levy scheme, and whether the penalty could be reduced or set aside in the absence of discretion under the rule.

Analysis: Rule 96ZO(3) provides that where a manufacturer fails to pay the amount payable for any month by the prescribed date, the manufacturer is liable to pay the outstanding duty with interest and a penalty equal to such outstanding duty or five thousand rupees, whichever is greater. The rule was treated as mandatory. It was also relied upon that the Supreme Court had held that there is no discretion under Rules 96ZO and 96ZQ to reduce the penalty.

Conclusion: Penalty was rightly attracted for delayed payment, and the Commissioner (Appeals) was not justified in setting it aside. The appeal was allowed in favour of the Revenue.

Final Conclusion: The impugned order was reversed and the penalty imposed by the adjudicating authority was restored.

Ratio Decidendi: Where Rule 96ZO(3) makes penalty mandatory for delayed payment of duty under the compounded levy scheme, no discretion exists to waive or reduce the statutory penalty.

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