Mandatory minimum excise penalty without mens rea was treated as arbitrary and unsustainable under settled precedent.

Mandatory minimum penalty for delayed duty payment under the compounded levy scheme was treated as unsustainable where it operated without mens rea and left no discretion to consider the nature or extent of default. The Court noted that earlier precedent had already held such a penalty to be excessive, arbitrary, and an unreasonable restriction on fundamental rights, and that the same view had been followed in later cases. On that basis, the controversy was regarded as concluded and no fresh substantial question of law survived for consideration in the revenue's challenge.

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Issues: Whether the revenue's appeal could succeed where the controversy stood covered by earlier precedent on the validity of mandatory penalty under Rule 96ZP(3) of the Central Excise Rules, 1944, and on the related liability to pay interest and the applicability of Section 38A of the Central Excise Act, 1944.

Analysis: The issue was found to be concluded by earlier decisions of the Court following the ruling that the provisions in the compounded levy scheme providing for mandatory minimum penalty for delayed payment, without mens rea and without any discretion to consider the extent or circumstances of delay, were excessive, arbitrary, and an unreasonable restriction on fundamental rights. The Court also noted that the same view had already been applied in subsequent cases, resulting in dismissal of the revenue's appeals. In that background, no surviving substantial question of law remained for fresh consideration in the present matter.

Conclusion: The challenge to the Tribunal's order was rejected, and the appeal was held to be unsustainable.

Final Conclusion: The decision affirms that mandatory penalty under the compounded levy provisions, to the extent it operated without discretion or consideration of mens rea, could not be sustained, and the revenue's appeal failed.

Ratio Decidendi: A rule imposing mandatory minimum penalty for delayed duty payment, without mens rea and without any discretion to consider the circumstances of default, is an excessive and arbitrary restriction and is ultra vires.

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