Penalty under Central Excise Rules requires intent to evade duty; voluntary reversal and disclosure defeated penalty.

Penalty under the Central Excise Rules was not attracted where the assessee voluntarily reversed credit, informed the department, and the record showed no suppression of facts or intention to evade duty. In the absence of the requisite mens rea, the penalty provisions under Rules 57U(6) and 173Q(1)(bb) could not be invoked, and deletion of the penalty was upheld.

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Issues: Whether penalty was leviable under Rules 57U(6) and 173Q(1)(bb) of the Central Excise Rules, 1944 when the assessee had reversed the credit, informed the department, and there was no finding of intention to evade duty.

Analysis: The Commissioner had examined the facts and found that the department was aware of the removal of the machinery, that the assessee voluntarily reversed the credit and intimated the department, and that there was no material showing suppression of facts or intention to evade duty. In such circumstances, and in the absence of the requisite mens rea for penalty, the penalty provisions could not be invoked. The view was also supported by the principle that penalty is not attracted where there is no intention to evade payment of duty.

Conclusion: Penalty was not leviable and the Revenue's challenge to the deletion of penalty failed.

Ratio Decidendi: Penalty under the Central Excise Rules is not imposable in the absence of intention to evade duty or suppression of material facts.

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