Penalty under Rule 96ZQ(5) for delayed duty payment cannot stand at full duty where the provision was held ultra vires.

Penalty under Rule 96ZQ(5) for delayed duty payment could not be sustained at the full duty amount where the provision had already been held ultra vires by the Punjab and Haryana High Court. The assessee's duty liability under Rule 96ZQ(1) was not disputed, but the only issue was the quantum of penalty under Rule 96ZQ(5)(ii). A Supreme Court ruling upholding penalty under the rule did not assist the Revenue because vires was not considered there. The enhanced penalty equal to duty was therefore not justified and the Revenue's appeal failed.

---

---

Issues: Whether, on facts of delayed duty payment, penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 was required to be imposed at the full duty amount or could be sustained at Rs. 5,000/- in view of the invalidity of the provision.

Analysis: The liability to pay duty under Rule 96ZQ(1) was not in dispute. The only question was the quantum of penalty under Rule 96ZQ(5)(ii). The provision had been held ultra vires by the Punjab and Haryana High Court in relation to the scheme of Rules 96ZO, 96ZP and 96ZQ, and no contrary decision was shown. The reliance on a Supreme Court decision upholding penalty under Rule 96ZQ(5) was held not to assist the Revenue because the vires of the provision had not been considered there.

Conclusion: The enhanced penalty equal to the duty amount was not justified, and the Revenue's appeal failed.

---