Penalty for delayed duty payment requires intent to evade; omission of the rule did not save the levy.

Penalty equal to the amount of duty under Rule 96ZP(3) of the Central Excise Rules, 1944 was held not leviable where the only default was delayed payment of duty, the duty and interest were promptly paid, and there was no allegation or proof of intent to evade. The rule was read with Section 37(4) of the Central Excise Act, 1944, which confines penalty to contraventions involving intent to evade payment of duty. Although the rule was omitted in 2001, pending proceedings were protected by Section 38A of the Act, but the penalty still failed on the merits.

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Issues: Whether penalty equal to the amount of duty was leviable under Rule 96ZP(3) of the Central Excise Rules, 1944 for delayed payment of duty, and whether the omission of the rule in 2001 defeated the penalty proceedings.

Analysis: Rule 96ZP(3) had to be read with the rule-making power under Section 37(4) of the Central Excise Act, 1944, which permits penalty only where there is contravention with intent to evade payment of duty. The record showed only delayed payment, prompt payment of duty with interest, and no allegation or proof of intent to evade. The Court also noted that proceedings already initiated were saved by Section 38A of the Central Excise Act, 1944 despite the omission of the rule. On the facts, and in the light of the view taken by several High Courts on the validity and scope of similar penalty provisions, the penalty was not leviable.

Conclusion: The penalty under Rule 96ZP(3) was not imposable on the assessee, and the question of law was answered against the appellant and in favour of the respondent-assessee.

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