Tribunal upholds penalty for non-payment of duty under Central Excise Rules

The Tribunal upheld the penalty imposed on the appellant under Rule 96ZQ(5)(ii) of the Central Excise Rules, emphasizing the mandatory nature of the penalty provision when duty liability under the Compounded Levy Scheme is not discharged by the due date. The decision was based on legal precedents and recent Supreme Court judgments, affirming the validity of the penalty amount determined by the Commissioner.

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Issues: Whether penalty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 was sustainable where the assessee, having opted for the compounded levy scheme, discharged the duty liability after the due date.

Analysis: The liability had been determined under the compounded levy scheme based on annual capacity of production. Once the assessee had opted for that scheme, failure to pay duty by the due date attracted the statutory consequence under Rule 96ZQ(5)(ii), which prescribes penalty equal to the outstanding duty or Rs. 5,000, whichever is higher. The rule leaves no discretion to impose a lesser penalty. The challenge based on the capacity determination rules and the plea that penalty could not be imposed was rejected in view of the settled position that the relevant sub-rule remained operative and had not been held ultra vires.

Conclusion: The penalty under Rule 96ZQ(5)(ii) was validly imposed and was upheld against the assessee.

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