Voluntary payment of differential duty without suppression does not justify mandatory central excise penalty.

Mandatory central excise penalty was held unsustainable where differential duty was paid voluntarily under a known working procedure, even if payments were sometimes delayed. The record showed that the assessee gathered depot-wise details before remitting duty, the department was aware of that practice, and there was no material to establish suppression or contumacious intent. In that setting, the statutory basis for penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 was not made out, so the Revenue's challenge failed.

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Issues: Whether mandatory penalty under Section 11AC of the Central Excise Act, 1944 and penalty under Rule 173Q of the Central Excise Rules, 1944 were imposable on the assessee for delayed payment of differential duty.

Analysis: The differential duty was being paid after the assessee collected details from depots spread across the country, and the record showed that payments were made voluntarily, sometimes after substantial delay, rather than on any fixed quarterly basis. The department was aware of this procedure, and the finding of the appellate authority that the duty had not been suppressed with contumacious intent was supported by the material on record. In these circumstances, the basis for imposing the statutory penalty was not made out.

Conclusion: The penalties under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 were not imposable, and the Revenue's challenge failed.

Ratio Decidendi: Where differential duty is paid voluntarily in accordance with a known working procedure and the facts do not establish culpable conduct warranting penal action, mandatory central excise penalty cannot be sustained.

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