Reduced excise penalty, confiscation limits, and partner liability were narrowed by statutory compliance and absence of available goods.

Statutory reduced penalty under section 11AC was applied where duty, interest, and 25% of the duty as penalty were paid within the stipulated period, so the firm's penalty was confined to 25% and the balance penalty was not sustainable. Confiscation and redemption fine were set aside because the goods were not physically available and no sustainable basis remained for confiscation. A separate penalty on the partner under rule 209A was also set aside because penalty had already been imposed on the partnership firm and no independent legal basis justified further penalty.

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Issues: (i) Whether the penalty imposed under section 11AC of the Central Excise Act, 1944 was liable to be restricted to 25% on payment of duty, interest, and the prescribed amount within the stipulated period; (ii) Whether confiscation of the goods and the consequential redemption fine were sustainable when the goods were not physically available; (iii) Whether separate penalty could be imposed on the partner under rule 209A of the Central Excise Rules, 1944 when penalty had already been imposed on the firm.

Issue (i): Whether the penalty imposed under section 11AC of the Central Excise Act, 1944 was liable to be restricted to 25% on payment of duty, interest, and the prescribed amount within the stipulated period.

Analysis: The applicable provision permitted payment of only 25% of the duty as penalty where the duty and interest determined were paid within 30 days of communication of the adjudication order. The record showed that the duty, interest, and 25% penalty had been paid within the stipulated time.

Conclusion: The balance penalty under section 11AC was not sustainable and stood confined to 25% of the duty determined.

Issue (ii): Whether confiscation of the goods and the consequential redemption fine were sustainable when the goods were not physically available.

Analysis: Confiscation presupposed availability of the goods or a legally sustainable basis for confiscation. On the facts recorded in the adjudication order, the goods were not available physically, and no sustainable basis remained for retaining the confiscation order or the redemption fine.

Conclusion: The confiscation and redemption fine were set aside.

Issue (iii): Whether separate penalty could be imposed on the partner under rule 209A of the Central Excise Rules, 1944 when penalty had already been imposed on the firm.

Analysis: The penalty had already been imposed on the partnership firm under section 11AC of the Central Excise Act, 1944. In those circumstances, and in the absence of a legally sustainable independent basis, a further penalty on the partner under rule 209A was not justified.

Conclusion: The penalty imposed on the partner was set aside.

Final Conclusion: The order was modified by restricting the firm's penalty to 25% of the duty, while setting aside confiscation, redemption fine, and the partner's penalty.

Ratio Decidendi: Where the statute grants reduced penalty on timely discharge of duty and interest, and where the goods are not available for confiscation, the adjudicatory order cannot sustain additional penal consequences beyond the statutory limit; further, a separate penalty on a partner is not justified once the firm has been penalised without an independent legal basis.

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