Penalty under Rule 173-Q requires notice of the exact clause of contravention; mistaken rule-period finding was rectified.

Rule 173-Q of the Central Excise Rules, 1944 remained operative until 30 June 2001 because the Central Excise Rules, 2001 took effect from 1 July 2001, so the earlier contrary view was treated as an error apparent from the record and was corrected by rectification. Even so, penalty could not be sustained where the notice and adjudication order failed to specify the exact clause of contravention under the penal rule. A person facing a penal provision with distinct clauses must be informed of the precise alleged breach before penalty is imposed. The rectification succeeded on the limited issue of the rule's operation, but the penalty was ultimately not sustained.

---

---

Issues: (i) Whether Rule 173-Q of the Central Excise Rules, 1944 was in force during the relevant period so as to sustain the rectification sought by the Revenue. (ii) Whether penalty under Rule 173-Q could be imposed in the absence of notice specifying the exact clause of contravention.

Issue (i): Whether Rule 173-Q of the Central Excise Rules, 1944 was in force during the relevant period so as to sustain the rectification sought by the Revenue.

Analysis: The relevant notification introduced the Central Excise Rules, 2001 with effect from 1 July 2001. On that basis, Rule 173-Q remained operative up to 30 June 2001. The earlier observation that the rule was not in force during the disputed period was therefore incorrect and constituted an error apparent from the record, warranting recall and modification under the rectification provision.

Conclusion: The rule was in force during the relevant period, and the rectification application succeeded on this limited point.

Issue (ii): Whether penalty under Rule 173-Q could be imposed in the absence of notice specifying the exact clause of contravention.

Analysis: Penalty under Rule 173-Q could not be sustained merely because the rule was extant. The notice and the adjudication order did not specify the particular clause of Rule 173-Q alleged to have been violated. In a penal provision containing distinct clauses, the assessee must be informed of the exact nature of the alleged contravention before penalty can be imposed. Since that was not done, imposition of penalty was not justified.

Conclusion: Penalty under Rule 173-Q was not imposable.

Final Conclusion: The prior order was recalled to the extent of the mistaken assumption on the operation of Rule 173-Q, but the substantive penalty on the assessee was ultimately not sustained, and the matter stood disposed of on that basis.

Ratio Decidendi: A penalty under Rule 173-Q cannot be imposed unless the assessee is put on notice of the exact clause of contravention, and an earlier mistaken finding on the operative period of the rule may be corrected by rectification when it is an error apparent from the record.

---