Suppression and extended-period penalty upheld, but separate Rule 173Q penalty deleted on the same facts.

A show cause notice, read as a whole with the assessee's admitted shortage of finished goods and modvatable inputs, was treated as sufficient to invoke the extended period and allege suppression and intent to evade duty. On that basis, the penalty equal to duty under Section 11AC read with Rule 57-I(4) of the Central Excise Rules was upheld. However, the Tribunal found no basis for imposing a separate penalty under Rule 173Q on the same facts, and that additional penalty was deleted, giving the assessee only partial relief.

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Issues: Whether the penalty equal to duty under Section 11AC of the Central Excise Act, 1944 read with Rule 57-I(4) of the Central Excise Rules, 1944 was sustainable on the facts and whether the separate penalty under Rule 173Q of the Central Excise Rules, 1944 could be sustained.

Analysis: The shortage of finished goods and modvatable inputs was admitted in the assessee's statement, and the show cause notice specifically referred to the facts showing non-payment of duty on goods cleared and excess availment of Modvat credit. The notice, read as a whole, was held to contain the necessary for invoking the extended period and for alleging suppression and contravention with intent to evade duty. On that basis, the challenge to the penalty equal to duty failed. At the same time, the Tribunal found no warrant for imposing a separate penalty under Rule 173Q when penalty was already attracted under the other provisions.

Conclusion: The penalty equal to duty under Section 11AC read with Rule 57-I(4) was upheld against the assessee, but the penalty of Rs. 5,000 under Rule 173Q was set aside in favour of the assessee.

Final Conclusion: The demand and the main penalty were sustained, but the order was modified to delete the additional Rule 173Q penalty, resulting in only partial relief to the assessee.

Ratio Decidendi: A show cause notice, when read cumulatively with the admitted facts, can validly sustain invocation of the extended period and penalty for suppression and intent to evade duty, but a separate penalty may still be deleted where it is found unwarranted on the same facts.

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