Revenue-neutral clerical error defeats personal penalty under Rule 173Q; no basis to sustain punishment absent continuing benefit.

Personal penalty under Rule 173Q was held unsustainable where the duty short-payment arose from a one-time clerical error in debiting clearance of inputs for job work at 10% of duty instead of 10% of value. The underlying duty demand had already been set aside as revenue neutral, since any amount debited on clearance would have been available as credit when the goods were received back from the job worker. In the absence of any finding of a continuing practice, mens rea, or undue benefit to the assessee, the tribunal found no basis to sustain a personal penalty merely because of departmental inconvenience, and the penalty was set aside.

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Issues: Whether personal penalty imposed under Rule 173Q was sustainable when the duty short-payment arose from a one-time clerical error and the exercise was revenue neutral.

Analysis: The penalty was based on a debit made on clearance of inputs for job work at 10% of duty instead of 10% of value. The underlying duty demand had already been set aside as unsustainable on the ground of revenue neutrality, because any amount debited at the time of clearance would have been available as credit on receipt of the goods from the job worker. The error was explained as an isolated mistake by the excise clerk and there was no finding of a continuing practice or undue benefit to the assessee. In these circumstances, no justification remained for sustaining a personal penalty merely on considerations of departmental inconvenience.

Conclusion: The penalty under Rule 173Q was unsustainable and was set aside in favour of the assessee.

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