Additional penalty after duty, statutory penalty, and interest requires merits review; rectification application could not be rejected outright.

Where duty, equal statutory penalty under Section 11AC of the Central Excise Act, 1944, and interest under Section 11AB had already been imposed for the same default, the sustainability of an additional penalty under Rule 173Q of the Central Excise Rules, 1944 read with Rule 25 of the Central Excise Rules, 2001 was a pure question of law arising from the record. The Tribunal was required to examine that contention on merits and could not reject the rectification application merely because the point had not been argued at the hearing. The issue was decided in favour of the assessee, and the matter was remitted to the Tribunal for fresh consideration of the rectification application in accordance with law.

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Issues: Whether, after imposition of duty, equal penalty under Section 11AC of the Central Excise Act, 1944, and interest under Section 11AB of the Central Excise Act, 1944, an additional penalty under Rule 173Q of the Central Excise Rules, 1944 read with Rule 25 of the Central Excise Rules, 2001 could survive, and whether the application for rectification of mistake could be rejected without examining that legal contention.

Analysis: The point regarding the sustainability of the additional penalty had been taken in the grounds of appeal and was a pure question of law arising from the record. Once duty, equal statutory penalty, and interest were already levied for the same default, the further penalty required consideration on merits. The Tribunal was therefore not justified in refusing to examine the rectification application merely on the ground that the point had not been argued at the hearing.

Conclusion: The question was answered in favour of the assessee. The appeal succeeded and the matter was sent back to the Tribunal for fresh consideration of the rectification application in accordance with law.

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