Penalty for wrong credit availment reduced after duty payment before notice, with leniency applied on justice grounds.

Where wrong availment of credit is detected and the duty is paid before the show cause notice is issued, a lenient view on penalty may be justified. The material consideration was that the duty demand had already been discharged on being pointed out by the Revenue, so the penalty was found liable to be moderated to meet the ends of justice. The penalty was accordingly reduced to Rs. 50,000, while the appeal was otherwise dismissed.

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Issues: Whether the penalty imposed in a case of wrong availing of credit could be reduced where the duty had been paid before issuance of the show cause notice.

Analysis: The duty demand had already been paid on being pointed out by the Revenue before the show cause notice was issued. In these circumstances, the request for a lenient view on penalty was accepted, and the quantum of penalty was considered liable to be moderated to meet the ends of justice.

Conclusion: The penalty was reduced to Rs. 50,000/-, and the appeal was otherwise dismissed.

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