Penalty under Central Excise rules reduced where job-work yarn dispute, duty was paid, and leniency factors supported relief.

Penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 was not treated as mandatory at the full duty amount in the circumstances described. Yarn had been sent for job work during the period governed by Rule 12B, the duty demand had already been paid, and the adjudicating authority's equal penalty was moderated because the rule did not require penalty to invariably match the duty evaded. The appellant's lack of its own manufacturing facility, limited means, and the later repeal of Rule 12B were considered relevant factors for leniency, and the penalty was reduced to Rs. 20,000.

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Issues: Whether the penalty imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 was liable to be reduced in the facts of the case.

Analysis: The person had sent yarn for job work during the relevant period governed by Rule 12B of the Central Excise Rules, 2002. The duty demand had already been paid. The adjudicating authority had imposed penalty equal to the duty evaded, but the rule did not mandate that the penalty must invariably match the duty amount. The absence of the appellant's own manufacturing facility, the limited means of the appellant, and the fact that Rule 12B had since been repealed were treated as relevant circumstances for considering leniency in penalty.

Conclusion: The penalty was reduced to Rs. 20,000, granting partial relief to the appellant.

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