Penalty ceiling under Central Excise Rules does not create a mandatory minimum penalty of Rs. 5,000.

Rule 173Q(1) of the Central Excise Rules, 1944 was interpreted as fixing only the maximum penalty, because it states that the penalty shall not exceed three times the value of the excisable goods involved or Rs. 5,000, whichever is greater. The provision was not read as creating a compulsory minimum penalty of Rs. 5,000, since the text does not impose a penalty equal to that amount. On that construction, a penalty of Rs. 1,000 was not shown to be illegal merely because it was below Rs. 5,000.

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Issues: Whether Rule 173Q(1) of the Central Excise Rules, 1944 prescribes a minimum penalty of Rs. 5,000 for the stated contraventions or only an upper limit of penalty, and whether the penalty of Rs. 1,000 imposed on the assessee was sustainable.

Analysis: The wording of Rule 173Q(1) provides that the penalty shall not exceed three times the value of the excisable goods involved or Rs. 5,000, whichever is greater. The provision was read as fixing only the maximum limit of penalty, not as mandating a minimum penalty of Rs. 5,000. The interpretation urged by the Revenue would have required language imposing a penalty equal to Rs. 5,000, which the rule does not use. The same view had already been accepted in earlier Tribunal precedent relied upon in the order.

Conclusion: Rule 173Q(1) does not prescribe a compulsory minimum penalty of Rs. 5,000. The penalty of Rs. 1,000 was not shown to be illegal on that ground.

Ratio Decidendi: Where a penalty provision states that the amount shall not exceed a specified sum, it fixes only the ceiling of punishment and does not create a mandatory minimum penalty.

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