Penalty under Rule 96ZP cannot survive when duty was already paid before annual capacity refixation after remand.

Penalty under Rule 96ZP of the Central Excise Rules, 1944 could not be sustained where the annual capacity of production was later refixed pursuant to remand and the duty had already been paid before that refixation. Once the duty stood discharged before the revised capacity determination, no amount remained due from the assessees and the foundation for penalty disappeared. The impugned orders therefore required no interference, and the appeals failed.

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Issues: Whether the respondents were liable to penalty under Rule 96ZP of the Central Excise Rules, 1944 after the annual capacity of production was refixed pursuant to remand and the duty had already been paid before such refixation.

Analysis: The annual capacity fixed earlier had been challenged and the matter was remanded for refixation. Pursuant to the remand, the capacity was refixed in 2004, but the duty had already been paid before that refixation. In these circumstances, no amount remained due from the respondents, and the basis for imposing penalty did not survive.

Conclusion: The respondents were not liable to penalty under Rule 96ZP, and the impugned orders required no interference.

Final Conclusion: The appeals failed and were dismissed, affirming the view that no penalty could be sustained after duty had already been paid before refixation.

Ratio Decidendi: Where duty stands paid before refixation of annual capacity pursuant to remand, no penalty can be sustained on the footing that any amount remained due.

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