Penalty under Rule 173Q set aside where credit was reversed and the dispute did not involve duty liability.

Penalty under Rule 173Q was held unsustainable where the only lapse was procedural delay in seeking extension of time for receipt of goods. The credit had already been reversed, and the assessee did not dispute the duty liability or entitlement to the reversed credit. In these circumstances, no basis existed for penal action, and the penalty was set aside in favour of the assessee.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules was justified where the credit had already been reversed and the assessee was not disputing the duty amount.

Analysis: The only lapse was procedural in seeking extension of time for receipt of the goods within the stipulated period. The credit had already been reversed, and the assessee was not contesting the duty amount or the entitlement to the reversed credit. In these circumstances, no justification existed for the imposition of penalty.

Conclusion: Penalty under Rule 173Q was not sustainable and was set aside in favour of the assessee.

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