Penalty for alleged duty evasion requires a clear allegation of intent; without it, excise penalties fail.

Penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules cannot be sustained where the show cause notice contains no allegation of intention to evade duty. The demand had already been paid before issuance of the notice, and on that factual basis the statutory ingredients for penal action were not satisfied. The same absence of deliberate evasion also defeated penalty under Rule 173Q. The penalties were therefore set aside, and the assessee obtained relief from the penal part of the demand.

---

---

Issues: Whether penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 was sustainable in the absence of an allegation of intention to evade duty.

Analysis: The demand had already been paid before issuance of the show cause notice, and the notice did not contain any allegation that the assessee intended to evade duty. In the absence of such an of intent to evade, the statutory basis for penalty under Section 11AC was not made out. On the same facts, penalty under Rule 173Q was also found to be unsustainable.

Conclusion: The penalties under Section 11AC and Rule 173Q were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The order was interfered with only to the extent of penalty, and the assessee obtained complete relief from the penal part of the demand.

Ratio Decidendi: Penalty provisions requiring proof of deliberate evasion cannot be sustained where the show cause notice contains no allegation of intention to evade duty.

---