Compounded levy provisions invalidated: penalty and interest under Rule 96ZP could not survive the Supreme Court ruling.

The mandatory penalty and interest imposed under Rule 96ZP of the Central Excise Rules, 1944 were unsustainable after the Supreme Court in Shree Bhagwati Steel Rolling Mills struck down the underlying compounded levy provisions. Applying that binding ruling, the Tribunal held that the levy could not be upheld and set aside the penalty and interest. The remaining portions of the impugned order were left undisturbed.

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Issues: Whether the penalty and interest imposed under Rule 96ZP of the Central Excise Rules, 1944 could be sustained after the Supreme Court struck down the compounded levy provisions.

Analysis: The dispute was covered by the Supreme Court's ruling in Shree Bhagwati Steel Rolling Mills, which held that the relevant compounded levy provisions in the erstwhile Central Excise Rules, 1944 were unsustainable and that levy of mandatory penalty and interest under those provisions could not survive. In view of that binding decision, the Tribunal held that the impugned levy could not be upheld.

Conclusion: The penalty and interest were set aside. The remaining parts of the impugned order were upheld.

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