Central Excise penalty sustained in principle but reduced after duty payment and surrounding circumstances were considered.

Penalty under the Central Excise Rules was sustained because the Tribunal found the appellant could not deny knowledge of the clearance price, making penal action justified. However, the penalty was reduced after the Tribunal considered the low value of the goods and the fact that duty had been paid immediately after the show cause notice. The duty demand was already satisfied, so the only live issue was the extent of penalty. The result was that the penalty was upheld in principle but scaled down from Rs. 30,000 to Rs. 5,000.

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Issues: Whether the penalty imposed under the Central Excise Rules was liable to be sustained in full, or reduced having regard to the surrounding circumstances.

Analysis: The duty demand had already been paid and the only surviving controversy concerned the penalty. The Tribunal accepted that the appellant could not deny knowledge of the clearance price and that, on that basis, the imposition of penalty was justified. At the same time, the Tribunal took into account the value of the goods and the fact that duty was paid immediately after the show cause notice.

Conclusion: The penalty was upheld in principle but reduced from Rs. 30,000 to Rs. 5,000.

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