Penalty under Rule 173Q(1)(a) fails where classification is disclosed, returns are filed, and no suppression is proved.

Penalty under Rule 173Q(1)(a) was not leviable where the classification list had been disclosed and approved by the Department, RT-12 returns were regularly filed and finalised, and duty was paid promptly after the show cause notice. On those facts, no suppression or misstatement was established, so the ingredients of a penal contravention were absent. The conclusion that the extended period under Section 11A(1) was not invocable further supported the absence of culpable conduct required for penalty.

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Issues: Whether penalty under Rule 173Q(1)(a) of the Central Excise Rules, 1944 was sustainable when the classification list had been filed and approved, RT-12 returns were regularly filed and finalised, duty was paid immediately on issuance of the show cause notice, and the extended period under Section 11A(1) of the Central Excise Act, 1944 was held inapplicable.

Analysis: The record showed that there was no suppression or misstatement. The classification list had already been submitted and approved by the Department, the RT-12 returns had been filed and assessed, and the duty was paid promptly after the show cause notice. On these facts, the ingredients necessary to establish a contravention attracting penalty under Rule 173Q(1)(a) were not made out. The finding that the extended period was not invocable further supported the conclusion that the case did not involve the kind of culpable conduct required for penalty.

Conclusion: Penalty under Rule 173Q(1)(a) was not leviable and the assessee succeeded on this issue.

Ratio Decidendi: Where classification is disclosed and approved, returns are regularly filed and finalised, duty is paid promptly on notice, and no suppression or misstatement is established, penalty for contravention under Rule 173Q(1)(a) cannot be imposed.

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