Penalty for duty evasion through inflated transport charges must be quantified separately for the post-28-9-96 period.

Penalty under Rule 173Q and Section 11AC was examined in a case involving alleged excess transportation charges used to suppress assessable value. The tribunal noted that the assessee's admission supported an intention to evade duty, so voluntary deposit did not by itself eliminate penal consequences. Section 11AC was treated as mandatory for the period after 28-9-96, but the exact penalty for that post-amendment period had not been quantified, so the matter was remanded for determination of the amount. The reduced penalty of Rs. 50,000 was retained as relatable to the period before 28-9-96 under Rule 173Q.

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Issues: Whether penalty under Section 11AC was mandatory for the period after 28-9-96 and whether the voluntary payment of duty by the assessee could absolve it from penal consequences.

Analysis: The respondents had admitted deduction of transport charges in excess of the actual amount payable, showing an intention to evade duty. Voluntary payment of duty after the lapse did not wipe out the penal liability. The penalty under Section 11AC was applicable mandatorily for the period after 28-9-96. As the duty involved for that period had not been quantified, the matter required remand for determination of the exact amount and the corresponding penalty. The penalty of Rs. 50,000/- already sustained was treated as relatable to the pre-28-9-96 period under Rule 173Q.

Conclusion: Penalty under Section 11AC was held to be mandatory for the post-28-9-96 period, voluntary deposit did not absolve the assessee, and the matter was remanded for quantification of duty and penalty for that period.

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