Mandatory penalty under excise rules upheld where the enabling statute authorises automatic consequences without officer discretion.

Rule 96ZO of the Central Excise Rules was upheld as a valid fiscal prescription because it was made under the enabling power in Section 37 of the Central Excise Act, 1944, and the parent statute did not require discretion to be vested in the assessing officer. The Court held that a mandatory penalty provision is not unconstitutional merely because it removes discretion, since fiscal rules may impose automatic consequences where authorised by the Act. The substantive vires challenge therefore failed, while limited instalment relief for payment of the dues was granted.

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Issues: Whether Rule 96ZO of the Central Excise Rules, framed under Section 37 of the Central Excise Act, 1944, was unconstitutional for making penalty mandatory without leaving any discretion to the assessing officer.

Analysis: The petitioners, having admittedly paid the duty belatedly, challenged the vires of the rule on the ground that it compelled levy of penalty irrespective of delay or guilt. The Court held that the rule was framed in exercise of statutory power under Section 37 of the Central Excise Act, 1944, and the parent statute did not require that discretion be conferred on the officer. In fiscal matters, there is no equity in tax, and a rule cannot be struck down merely because it prescribes a mandatory consequence which the statute permits.

Conclusion: The challenge to the constitutionality of Rule 96ZO failed, and the validity of the mandatory penalty provision was upheld.

Final Conclusion: The substantive challenge was rejected, though limited instalment relief was granted for payment of the amounts due.

Ratio Decidendi: A subordinate fiscal rule prescribing mandatory penalty is valid if it is within the scope of the enabling statute and the parent Act does not require conferral of discretion on the authority.

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