Excessive excise penalty reduced where no revenue loss was shown and the default did not justify the quantum imposed.

Penalty under the Central Excise Rules was reduced where the goods were duly accounted for against cash payments, the related Modvat credit had lapsed, and no revenue loss was shown. On those facts, the penalty initially imposed was considered exorbitant and not commensurate with the established default. The penalty was therefore reduced to Rs. 10,000, while the remainder of the order was sustained.

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Issues: Whether the penalty imposed under Rule 173Q of the Central Excise Rules, 1944 was excessive and liable to be reduced.

Analysis: The liability to penalty was not seriously disputed, but the facts showed that the goods were accounted for in the market against cash payments and that the Modvat credit relatable to those goods had lapsed. The record also indicated that no loss of revenue had been caused. In these circumstances, the penalty of Rs. 1 lakh was found to be exorbitant and not commensurate with the facts established.

Conclusion: The penalty was reduced to Rs. 10,000 and the impugned order was otherwise sustained.

Final Conclusion: The appeal succeeded only to the limited extent of reduction in penalty, while the remainder of the order remained undisturbed.

Ratio Decidendi: Where no revenue loss is involved and the default does not justify the quantum imposed, a penalty under the excise rules may be reduced as being excessive.

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