Mandatory excise penalty under Rule 96-ZP(3) leaves no discretion to reduce the statutory amount.

Rule 96-ZP(3) of the erstwhile Central Excise Rules, 1944 was treated as mandatory, not discretionary, for penalty purposes. The Court read that provision as pari materia with Rules 96-ZQ and 96-ZO and relied on its earlier three-judge construction of those rules, which held that the statutory scheme left no scope to reduce the penalty on equitable or factual grounds. On that reasoning, the view that authorities could vary the quantum of penalty was rejected, and the reduced-penalty approach was held unsustainable.

---

---

Issues: Whether the authorities had any discretion to reduce the penalty imposed under Rule 96-ZP(3) of the erstwhile Central Excise Rules, 1944.

Analysis: The Court compared Rule 96-ZP with Rules 96-ZQ and 96-ZO and found them to be pari materia and identical. It applied the earlier three-judge decision construing the latter rules, which held that the statutory scheme left no scope for discretion in the matter of penalty. On that basis, the Court treated the penalty provision as mandatory and rejected the view that the authorities could reduce the quantum depending on the facts of the case.

Conclusion: The answer was in the negative. No discretion was available to reduce the penalty under Rule 96-ZP(3), and the reduced penalty view taken below was unsustainable.

Final Conclusion: The appeals succeeded, the impugned judgment of the High Court and the order of the Tribunal were set aside, and the adjudicating authority's order was restored.

Ratio Decidendi: Where a penalty provision is mandatory and pari materia provisions have already been construed as leaving no room for discretion, the authorities cannot reduce the statutory penalty on equitable considerations.

---