Mandatory interest and penalty under the compounded levy scheme apply on default, with no discretion to reduce statutory consequences.

Rule 96ZO(3) under the compounded levy scheme was treated as mandatory on default: interest accrued at the specified rate from the date of default until payment, and penalty was payable at the duty amount or the prescribed minimum, whichever was greater. The governing rule left no discretion to impose a lesser interest or penalty, so the authority could not reduce or waive those consequences in the absence of statutory power. The plea for abatement under Rule 96ZO(2) was not accepted because the record did not show compliance with the prescribed requirements. The challenge to restoration of the original demand therefore failed.

---

---

Issues: Whether, under Rule 96ZO(3) of the Central Excise Rules, 1944, the assessee was liable to pay interest and penalty on the outstanding duty under the compounded levy scheme.

Analysis: The provision governing default under the compounded levy scheme was treated as mandatory in terms. The third proviso to Rule 96ZO(3) made the assessee liable to pay interest at the specified rate from the date of default until actual payment, and also liable to penalty equal to the duty amount or the prescribed minimum, whichever was greater. The Court found no discretion in the rule to impose a lesser penalty or interest. The plea relating to abatement under Rule 96ZO(2) was not entertained for want of sufficient material showing compliance with the prescribed requirements.

Conclusion: The liability to interest and penalty was upheld and the challenge to the restoration of the order-in-original failed.

Final Conclusion: The appeal did not succeed, and the order imposing duty-related interest and penalty under the compounded levy framework remained undisturbed.

Ratio Decidendi: Where the governing rule expressly makes interest and penalty mandatory on default under the compounded levy scheme, the adjudicating authority cannot reduce or waive those consequences in the absence of statutory discretion.

---