Disproportionate excise penalty reduced where duty was paid and no wrongful Cenvat credit or account manipulation was shown.

Penalty imposed on a registered dealer for receiving duty-unpaid goods without a central excise invoice and for not recording them in its books was found excessive on the facts. The absence of any allegation of improper account maintenance or wrongful passing on of Cenvat credit, together with the manufacturer's discharge of duty liability and the earlier dropping of confiscation and penalty proceedings on another issue, justified a lenient view. The original penalty was therefore reduced as disproportionate.

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Issues: Whether the penalty imposed on the registered dealer under Rule 25(1)(b) of the Central Excise Rules, 2002 for receiving goods cleared without duty and without central excise invoice, and for not accounting them in its records, deserved reduction.

Analysis: The penalty equal to the duty was considered excessive in the facts of the case. The absence of allegations of improper maintenance of accounts or wrongful passing on of cenvat credit, the fact that the manufacturer had discharged the duty liability, and the earlier dropping of confiscation and penalty proceedings on another issue were treated as circumstances justifying a lenient approach. On this basis, the severity of the original penalty was held to be disproportionate.

Conclusion: The penalty was reduced from Rs. 1,30,275 to Rs. 10,000 in favour of the assessee.

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