Judicial discretion in statutory penalty matters: technical delay in duty payment cannot justify mechanical penalty without considering the nature of default.

Statutory penalty for a one-day delay in paying central excise duty could not be imposed mechanically where the default was cured the next day. The Court applied the principle that even when a rule prescribes penalty, the authority must exercise discretion judicially and assess whether the breach is merely technical or venial, or whether it reflects deliberate, contumacious, dishonest, or consciously indifferent conduct. As the impugned order did not show consideration of these factors, the penalty was set aside and the matter remitted for fresh adjudication in accordance with law.

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Issues: Whether penalty under Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 could be sustained for a one-day delay in payment of duty without proper exercise of discretion.

Analysis: The levy arose from a short delay in paying the balance duty, the default being made good on the very next day. The governing legal position, as applied by the Court, was that even where the rule prescribes penalty, the authority is not bound to impose it mechanically; discretion must be exercised judicially. Penalty is ordinarily not warranted for a technical or venial breach, and the authority must consider whether the conduct was deliberate, contumacious, dishonest, or in conscious disregard of the obligation. The impugned order did not reflect consideration of these governing principles.

Conclusion: The penalty order could not be sustained and was liable to be set aside, with the matter remitted for fresh adjudication in accordance with law.

Ratio Decidendi: Statutory penalty, even when prescribed in mandatory terms, cannot be imposed mechanically for a technical default; the authority must exercise discretion judicially and consider whether the breach is venial or accompanied by contumacious or deliberate conduct.

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