Excise penalty sustained for active participation in diversion of duty-free goods; concurrent factual findings raised no substantial question of law.

Penalties under the Central Excise Rules were sustained where the factual findings showed a common scheme to procure excisable goods duty-free under CT-3 and warehousing documents and divert them to the local market with the appellants' active participation and knowledge. The challenge that one appellant had no separate duty liability, and that the show cause notice did not specifically refer to the penalty provisions, was rejected because the notice, replies, and concurrent findings covered rule contravention, removal without duty payment, and facilitation of evasion. The court treated the cited Supreme Court authority as distinguishable on its facts and held that no substantial question of law arose.

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Issues: Whether penalties under Rule 173Q and Rule 209 of the Central Excise Rules, 1944 could be sustained against the appellants for their role in the diversion and removal of excisable goods, and whether the appeals raised any substantial question of law.

Analysis: The factual findings of the Commissioner and the Tribunal showed a common scheme in which excisable goods were procured duty-free on the strength of CT-3 and allied warehousing documents and were then diverted to the local market with the active participation and knowledge of the appellants. The challenge based on absence of separate duty liability on one appellant, and the contention that the show cause notice did not specifically support the penalty provisions, was rejected because the notice, replies, and concurrent findings covered contravention of the rules, removal without payment of duty, and facilitation of the evasion scheme. The decision relied on the settled principle that penalty is sustainable where the person concerned is responsible for removal or diversion of excisable goods in contravention of the rules, even if the duty demand is fastened on another entity. The reliance on the cited Supreme Court decision was held to be misplaced because that case turned on different facts and on the absence of specification of the exact clause of the penalty rule.

Conclusion: The penalties were upheld and the challenge failed; no substantial question of law arose.

Final Conclusion: The appeals were dismissed and the revenue's case on penalty and rule violation stood confirmed.

Ratio Decidendi: Penalty under the excise penalty rules is maintainable where the person proceeded against actively participates in the removal or diversion of excisable goods in contravention of the rules, even if the duty liability is determined against another party, and such a finding does not give rise to a substantial question of law when based on concurrent findings of fact.

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