Discretion in penalty under Rule 96ZP(3) allowed reduction where duty was paid late with interest and bona fide belief was shown.

Penalty under Rule 96ZP(3) of the Central Excise Rules was treated as discretionary in quantum, so the maximum penalty was not required in every case. Where the assessee paid the monthly duty belatedly but also paid interest, and acted under a bona fide belief based on past practice and the pre-amendment compliance mode, reduction of penalty was justified. The penalty was therefore reduced to Rs. 20,000, while the rest of the adjudication remained undisturbed.

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Issues: Whether the penalty imposed for delayed payment of duty under Rule 96ZP(3) of the Central Excise Rules, 1944 was liable to be sustained in full, or reduced in view of the facts and circumstances.

Analysis: The appellants paid the monthly duty belatedly but also paid interest, and the record indicated that they acted under a bona fide understanding based on their past practice and the pre-amendment mode of compliance. The provision was applied in the context of a penalty already imposed at the maximum level, but the adjudicating authority had discretion in determining quantum. In light of the bona fide impression, the payment of interest, and the view that maximum penalty was not mandatory in every case, a reduction of penalty was justified.

Conclusion: The penalty was not sustainable in the full amount and was reduced to Rs. 20,000. The impugned order was otherwise upheld.

Final Conclusion: The appeal succeeded only to the extent of reduction of penalty, while the rest of the adjudication remained undisturbed.

Ratio Decidendi: Penalty under Rule 96ZP(3) is discretionary in quantum and may be reduced where the assessee acted under a bona fide belief and the duty has been paid with interest.

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