Penalty for wrongly taken capital goods credit fails without proof of fraud, suppression, or intent to evade duty.

Penalty under Rule 57U(6) of the Central Excise Rules, 1944 was held unsustainable because the record did not establish fraud, wilful misstatement, collusion, suppression of facts, or contravention with intent to evade duty. Credit had been taken on capital goods, and when the duty shortfall was pointed out at removal, the assessee ed the lapse and paid the duty. On those facts, the statutory ingredients for the penal provision were not proved, so deletion of the penalty was justified.

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Issues: Whether penalty under Rule 57U(6) of the Central Excise Rules, 1944 was attracted on the facts of the case.

Analysis: Rule 57U(6) applies only where credit of duty paid on capital goods has been wrongly taken by reason of fraud, wilful misstatement, collusion, suppression of facts, or contravention of the Act or the rules with intent to evade payment of duty. The assessee had taken credit on capital goods and, on the duty shortfall being pointed out at the time of removal, accepted the lapse and paid the duty. On those facts, the ingredients required to invoke the penal provision were not established.

Conclusion: Penalty under Rule 57U(6) was not sustainable and its deletion was justified.

Final Conclusion: The appeal failed, and the deletion of the penalty was upheld.

Ratio Decidendi: Penalty provisions requiring fraud, wilful misstatement, suppression, or similar culpable conduct cannot be invoked unless those specific ingredients are proved on the facts.

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