Penalty for excise duty evasion unsustainable without essential suppression allegations and factual basis for removal without duty payment.

Penalty under Rule 173Q was held unsustainable where the show cause notice did not plead the essential ingredients of fraud, wilful mis-statement, collusion or suppression of facts with intent to evade duty. The Revenue could not rely on a bare or isolated allegation to invoke Rule 57-I, and the Tribunal's finding that the declared obsolete goods were not removed without payment of duty, and that duty had in fact been paid on removal, was treated as a reasonable factual view. On that basis, the penalty deletion was maintained and the Revenue's challenge failed.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules, 1944 could be sustained when the show cause notice did not disclose the necessary ingredients of Rule 57-I of the Central Excise Rules, 1944 and the Tribunal had found no removal of goods without payment of duty.

Analysis: The allegations in the show cause notice did not establish fraud, wilful mis-statement, collusion or suppression of facts with intent to evade duty. A solitary allegation could not be read in isolation and, in the absence of the requisite foundational averments, the Revenue could not show that Rule 57-I was properly attracted. The Tribunal also recorded a finding that the declared obsolete goods were not removed without payment of duty and that duty had been paid on removal. The view taken by the Tribunal was held to be a reasonable and possible view on the facts.

Conclusion: The penalty was not sustainable and the questions were answered against the Revenue.

Final Conclusion: The appeal failed and stood dismissed, with the Tribunal's deletion of penalty maintained.

Ratio Decidendi: Penalty cannot be sustained on the basis of bald or isolated allegations unless the show cause notice contains the essential ingredients of suppression or other culpable conduct required by the governing provision, and a reasonable factual finding by the Tribunal will not be interfered with.

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