Penalty sustained under Rule 25 despite wrong Section 11AC citation, as suppression was not established and duty was voluntarily paid.

An incorrect statutory reference did not invalidate a penalty where the factual and legal basis supported the sanction under Rule 25 of the Central Excise Rules. The duty demand had been confirmed under Section 11A without invoking the extended period, so the conditions for penalty under Section 11AC of the Central Excise Act were not met. As the assessee had itself identified ineligibility for SSI exemption and paid the differential duty with interest, suppression was not established. The Revenue's challenge to deletion of the enhanced penalty therefore failed, and the penalty was sustained as one under the correct rule despite the mistaken citation.

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Issues: Whether the penalty imposed on the assessee could be sustained as penalty under Rule 25 of the Central Excise Rules despite an incorrect reference to Section 11AC of the Central Excise Act, 1944, and whether the Revenue's appeal against deletion of the enhanced penalty called for interference.

Analysis: The duty demand had been confirmed under Section 11A of the Central Excise Act, 1944 without invoking the proviso, and the show cause notice had been issued within time without resort to the extended period. In such circumstances, the basis for penalty under Section 11AC did not arise. The assessee had itself noticed the ineligibility for SSI exemption and paid the differential duty with interest, so invocation of suppression was unwarranted. The original authority's penalty was therefore supportable as one under Rule 25 of the Central Excise Rules, and the appellate authority's reference to Section 11AC did not justify interference.

Conclusion: The Revenue's challenge failed and the penalty order was sustained as a penalty under Rule 25 of the Central Excise Rules, not under Section 11AC of the Central Excise Act, 1944.

Ratio Decidendi: Where the factual basis does not attract Section 11AC and the assessee has voluntarily paid duty without suppression, a penalty may still be upheld under the appropriate rule notwithstanding an incorrect statutory citation in the order.

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