Penalty under invalid excise rule could not survive after the Supreme Court struck down its legal foundation.

Penalty under Rule 96ZQ(5)(ii) could not be sustained once the Supreme Court had struck down the rule, because the legal foundation for the levy ceased to exist. The Bombay HC treated the Supreme Court's ruling as binding and applied it to the pending appeal, which meant the Revenue could not rely on the invalid rule to support the penalty. The appeal was dismissed in line with that authoritative position.

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Issues: Whether the penalty imposed under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 could survive after the rule itself had been struck down by the Supreme Court.

Analysis: The appeal was considered in the light of the Supreme Court's decision holding the relevant rule invalid. Once the rule creating the penalty was struck down, the foundation for sustaining the penalty ceased to exist. The issue was treated as concluded by the authoritative pronouncement of the Supreme Court, and the appeal was to be decided consistently with that binding position.

Conclusion: The penalty could not survive, and the Revenue's appeal was dismissed.

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