Penalty for non-deliberate excise short-payment and redemption fine without available goods were both held unsustainable.

Penalty was held unsustainable for short-payment of special excise duty where the appellant had disclosed clearances in returns, later paid the duty with interest, and the record showed budget-related confusion rather than deliberate evasion. The Tribunal found the ingredients for penalty under Section 11AC of the Central Excise Act and Rule 173Q absent, so the penalty was waived. Redemption fine was also held unsustainable because the goods had already been cleared and were not available for confiscation, making the prerequisite for such fine unsatisfied. Relief was granted on both counts, while the duty and interest already discharged were left undisturbed.

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Issues: (i) Whether penalty was exigible under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 for short-payment of special excise duty arising from the budget-related confusion; (ii) Whether redemption fine was sustainable when the goods were not available for confiscation.

Issue (i): Whether penalty was exigible under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 for short-payment of special excise duty arising from the budget-related confusion.

Analysis: The appellant had disclosed the clearances in its returns and later discharged the duty liability with interest. The short-payment arose from confusion created by the budget proposals and the corresponding duty position, and the record did not disclose deliberate evasion or conduct justifying penal action. In these circumstances, the ingredients required for imposing penalty were held to be absent.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 was not sustainable and was waived.

Issue (ii): Whether redemption fine was sustainable when the goods were not available for confiscation.

Analysis: Redemption fine is linked to the availability of the goods for confiscation. Since the goods had already been cleared and were not available, the condition precedent for imposing redemption fine was not satisfied. The Tribunal followed the principle that redemption fine cannot be imposed in such a situation.

Conclusion: Redemption fine was not sustainable and was waived.

Final Conclusion: The appeal succeeded and the appellant obtained relief against both penalty and redemption fine, with the duty and interest already discharged remaining undisturbed.

Ratio Decidendi: Penalty under Section 11AC and redemption fine for confiscation cannot be imposed where the short-payment is not shown to be deliberate and the goods are not available for confiscation.

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