Penalty under special excise procedure was unsustainable where duty was fully paid and no denial was timely communicated.

Penalty was held unwarranted where the duty had been paid in full, the assessee had followed the special procedure under Rule 173GG after intimating the Central Excise authorities, and no timely communication was given denying that benefit. In the absence of any duty evasion or demonstrated default, the penalty was set aside and the appeal was allowed.

---

---

Issues: Whether penalty was sustainable when the duty had been paid in full, the assessee had applied for and availed the special procedure under Rule 173GG, and no timely communication was made denying that benefit.

Analysis: The duty amount stood discharged in full, and the assessee had followed the procedure after intimation to the Central Excise authorities. No communication was issued in time informing the assessee that the benefit of the procedure was unavailable. In the absence of any duty evasion, the imposition of penalty was held to be unwarranted.

Conclusion: The penalty was set aside and the appeal was allowed.

---