Rule 173Q penalty cannot be newly imposed on appeal where duty was paid before notice and assessment remained provisional.

Penalty under Rule 173Q was treated as inadmissible where the original authority had not imposed any such penalty, the assessments were still provisional, and duty had been paid before finalisation and before the show-cause notice. The appellate authority could not, on its own, introduce and impose penalty in the absence of a grievance from the Revenue on that issue. The penalty order was therefore set aside.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules could be imposed when the original authority had not imposed such penalty, the assessments were provisional, and duty had been paid before finalisation of assessment and before issuance of the show-cause notice.

Analysis: The penalty was imposed by the Commissioner (Appeals) despite the absence of any penalty under Rule 173Q in the original order and despite no grievance from the Revenue on that score. The liability to penalty was examined in the light of the settled position that where duty is paid before the show-cause notice, and especially where assessments remain provisional and are not yet finalised, penal provisions are not attracted. The appellate authority's attempt to initiate and impose penalty on its own was held to be contrary to law.

Conclusion: Penalty under Rule 173Q was not leviable; the order imposing penalty was set aside, and the appeal was allowed.

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