Suppression in excise clearances attracts penalty, but quantum may be reduced for proportionality and case-specific circumstances.

Removal of excisable goods without intimation and without payment of duty was treated as suppression, attracting penalty under Rule 173Q(1) read with Rule 226 of the Central Excise Rules, 1944. The note also records that the penalty position was considered consistent with the post-Section 11AC framework. However, the quantum had to be proportionate to the circumstances, including the appellant's status as a State Government workshop manufacturing parts for repair of State-owned tubewells. Penalty was therefore sustained in principle, but reduced on proportionality grounds.

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Issues: Whether penalty was leviable for removal of excisable goods without intimation and without payment of duty, and whether the penalty of an amount equivalent to duty required reduction.

Analysis: The clearance of goods without informing the Central Excise department and without payment of duty established suppression. On that basis, penalty was attracted under Rule 173Q(1) read with Rule 226 of the Central Excise Rules, 1944, and the earlier view that penalty would also be relevant for the period after the introduction of Section 11AC of the Central Excise Act, 1944 supported the finding of default. At the same time, the quantum of penalty had to be proportionate to the circumstances, including the nature of the appellant as a State Government workshop manufacturing parts for repair of State-owned tubewells.

Conclusion: Penalty was upheld in principle, but the amount was reduced from the duty equivalent to Rs. 50,000.

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