Procedural lapse in defective invoicing justified only a nominal penalty where no clandestine removal was found

Penalty for reprinting defective invoices and taking the benefit of Notification No. 67/95 without prior intimation was treated as disproportionate where the lapse was only procedural. The Tribunal noted that the assessee had not cancelled the defective invoices or issued fresh ones, but the lower appellate authority had already found no clandestine removal and had characterised the matter as a procedural irregularity. On that basis, the penalty was reduced as excessive for the nature of the breach, and the relief was limited to a nominal penalty.

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Issues: Whether the penalty imposed for reprinting invoices with errors and for availing the benefit of Notification No. 67/95 without prior intimation was liable to be reduced.

Analysis: The Tribunal noted that the assessee had admittedly committed a lapse in not cancelling the defective invoices and issuing fresh ones. The lower appellate authority had already found no clandestine removal and treated the matter as a procedural irregularity, though it held that overwriting or reprinting on duty-paying documents was not permissible. In the circumstances, the penalty was considered excessive for the lapse involved.

Conclusion: The penalty was reduced from Rs. 75,000 to Rs. 2,000 in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of reduction of penalty, and the remaining relief was declined.

Ratio Decidendi: Where the dispute discloses only a procedural lapse without clandestine removal, the penalty may be scaled down to a nominal amount.

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