Statutory penalty equal to duty may be treated as a maximum, allowing discretion to impose a lesser amount.

A statutory penalty under Rule 96ZP(3) of the Central Excise Rules, 1944, expressed as equal to the duty outstanding, may operate as a maximum rather than a rigid mandatory amount. Where the duty was delayed but substantially paid before the show cause notice, the balance was paid during adjudication, and interest was paid, the authority could consider the surrounding circumstances and impose a lesser penalty. On that basis, the reduced penalty was sustained and no interference was made with the Commissioner (Appeals)' exercise of discretion.

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Issues: Whether the penalty prescribed under Rule 96ZP(3) of the Central Excise Rules, 1944 was to be imposed mandatorily at an amount equal to the duty outstanding, or whether the authority retained discretion to levy a lesser penalty having regard to the facts and circumstances.

Analysis: The respondents had admittedly failed to discharge the duty liability within the time stipulated under Section 3A of the Central Excise Act, 1944 and Rule 96ZP of the Central Excise Rules, 1944, so liability to penalty arose. The Tribunal referred to the Supreme Court's view that a statutory penalty described as equal to the duty amount may operate as the maximum penalty rather than an inflexible amount in every case, and that the assessing authority can consider the circumstances while fixing the quantum. It also noted that the duty had been substantially paid before the show cause notice, the balance was paid during adjudication, and interest had been paid, with no dispute as to financial hardship.

Conclusion: The penalty under Rule 96ZP(3) was not required to be levied invariably at the full amount of duty, and the reduced penalty was justified. The Revenue's appeal was rejected.

Final Conclusion: The impugned order reducing the penalty was sustained, and no interference was made with the Commissioner (Appeals)' exercise of discretion.

Ratio Decidendi: A statutory penalty expressed as equal to the duty amount may, on the facts of the case, operate as a maximum penalty and not as a rigid mandatory minimum, leaving discretion to impose a lesser penalty where warranted.

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