Penalty under Rule 173Q cannot stand where the show cause notice was later amended and duty was deposited.

Penalty under Rule 173Q of the Central Excise Rules, 1944 was held unsustainable where the demand was initially proposed under Section 11AC of the Central Excise Act, 1944 and a corrigendum substituting Rule 173Q was issued only after the reply to the show cause notice. The duty was re-quantified and deposited by the assessee, and the record did not support penal consequence on those facts. The penalty was therefore set aside in favour of the assessee.

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Issues: Whether penalty imposed under Rule 173Q of the Central Excise Rules, 1944 was sustainable in the facts of the case.

Analysis: The demand had initially been proposed with reference to Section 11AC of the Central Excise Act, 1944, and only after the reply to the show cause notice was filed was a corrigendum issued substituting Rule 173Q of the Central Excise Rules, 1944. The duty had also been re-quantified and deposited by the appellant. In these circumstances, the record did not justify the levy of penalty.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

Ratio Decidendi: Where the facts do not justify penal consequence and the assessee has deposited the duty, penalty under Rule 173Q cannot be sustained merely on the basis of a substituted provision in the show cause notice.

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