Penalty reduction for weak evidence in alleged paper transactions under central excise rules

Penalty under Rule 173Q of the Central Excise Rules was reduced because the record did not show proper investigation at either the consignor's end or the consignee's end to verify actual supply and receipt of goods. The finding that the vehicle numbers in the invoices could not have carried the alleged quantity, and that the transactions were only paper transactions, was not supported by sufficient inquiry. In those factual circumstances, equal penalty was considered excessive, and the penalty was therefore reduced.

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Issues: Whether the penalty imposed under Rule 173Q of the Central Excise Rules, 1944 was liable to be reduced in view of the facts and the nature of the evidence on record.

Analysis: The penalty had been sustained on the basis that the vehicle numbers mentioned in the invoices could not have carried the alleged quantity of goods and that the transactions were only paper transactions. However, the record disclosed no proper investigation at the consignor's end to verify actual supply of goods and none at the consignee's end to verify receipt of goods. In the absence of such investigation, equal penalty was found to be excessive. The prior orders cited in similar matters also supported a lenient view on penalty quantum in identical factual situations.

Conclusion: The penalty was reduced to Rs. 5,000, and the appeal was disposed of accordingly.

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