Penalty cannot be implied from excise machinery provisions where the automobile cess law contains no express penal clause.

Penalty cannot be imposed for non-payment of automobile cess by importing Rule 173(Q) of the Central Excise Rules, 1944 where the Automobile Cess Rules, 1984 and the parent Act contain no express penalty provision; application of excise machinery for levy and collection does not, by itself, create a distinct penal liability. Interest under Section 11AA of the Central Excise Act, 1944 was also unavailable because it applies only when duty determined under Section 11A remains unpaid beyond three months after determination, and the cess was paid within the relevant period. The court therefore treated both the penalty and interest demands as unsustainable on the stated legal and factual basis.

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Issues: (i) whether penalty could be imposed under Rule 173(Q) of the Central Excise Rules, 1944 for non-payment of automobile cess when the Automobile Cess Rules, 1984 and the parent Act contained no specific penalty provision; (ii) whether interest under Section 11AA of the Central Excise Act, 1944 was leviable on the facts of the case.

Issue (i): whether penalty could be imposed under Rule 173(Q) of the Central Excise Rules, 1944 for non-payment of automobile cess when the Automobile Cess Rules, 1984 and the parent Act contained no specific penalty provision.

Analysis: Rule 3 of the Automobile Cess Rules, 1984 applied the Central Excise levy and collection machinery to automobile cess, but the Court held that penalty is not merely incidental to assessment and is a distinct statutory liability. Relying on the principle that a penalty cannot be inferred from procedural or machinery provisions, the Court held that, in the absence of a specific penalty provision in the Automobile Cess Rules, 1984 or in the Industries (Development and Regulation) Act, 1951, Rule 173(Q) could not be invoked to impose penalty merely because Central Excise provisions were made applicable for collection purposes.

Conclusion: Penalty under Rule 173(Q) was not leviable, and the finding was in favour of the assessee.

Issue (ii): whether interest under Section 11AA of the Central Excise Act, 1944 was leviable on the facts of the case.

Analysis: Section 11AA fastened interest only when duty determined under Section 11A remained unpaid beyond three months from the date of determination. The automobile cess having been paid within the stated period after adjudication, the condition for levy of interest was not satisfied.

Conclusion: Interest was not leviable on the facts found by the Court, and this issue also favoured the assessee.

Final Conclusion: The appeals failed because the impugned penalty could not be sustained in the absence of an express statutory penalty provision, and the ancillary claim for interest also did not survive on the facts.

Ratio Decidendi: A penalty cannot be imposed by importing general procedural provisions unless the charging statute or delegated legislation expressly creates the liability to penalty; incorporation of excise machinery provisions for levy and collection does not by itself authorise penalty.

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