Mandatory excise penalty on delayed duty payment leaves no discretion to reduce the prescribed quantum.

Penalty under Rule 96-ZQ of the Central Excise Rules, 1944 is described as mandatory once duty is not paid by the stipulated date, with liability extending to the outstanding duty, interest and a penalty equal to the duty outstanding or Rs. 5,000, whichever is greater. The text says the mandatory wording leaves no discretion to scale down the penalty after the rule is attracted. It also notes that the same approach was applied to the analogous penalty scheme under Section 11AC of the Central Excise Act, 1944, where the statutory conditions were treated as excluding discretion in quantifying penalty.

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Issues: Whether penalty under Rule 96-ZQ of the Central Excise Rules, 1944, is mandatory once the assessee fails to pay duty by the stipulated date and whether the Tribunal could reduce the quantum of penalty.

Analysis: Rule 96-ZQ(5) provides that on failure to pay duty by the date specified in Rule 96-ZQ(3), the assessee becomes liable to pay the outstanding duty with interest and a penalty equal to the duty outstanding or Rs. 5,000, whichever is greater. The use of mandatory language indicates that the authority has no discretion to scale down the penalty once the rule is attracted. The same principle was applied while construing the analogous statutory scheme under Section 11AC of the Central Excise Act, 1944, which was understood to exclude discretion in quantifying the penalty once the statutory conditions are satisfied.

Conclusion: The Tribunal had no discretion to reduce the penalty and its order scaling down the penalty was set aside.

Ratio Decidendi: Where the charging provision makes penalty mandatory upon failure to comply with the statutory time-limit, the adjudicating authority cannot reduce the penalty below the prescribed measure once the provision is applicable.

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