Excise penalty on bogus invoice clearances upheld, but separate proprietor penalty set aside after firm was already penalised.

Penalty under the Central Excise Act and Rules was upheld where the show-cause notice specifically alleged clearance of goods without payment of duty through bogus invoices and identified the relevant contravention; the absence of a further sub-clause reference did not invalidate the penalty. However, a separate penalty on the proprietor was not sustained because the proprietary concern had already been penalised for the same contravention. The substantive result was that the penalty against the proprietary concern remained intact, while the penalty on the proprietor was set aside on the facts.

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Issues: (i) Whether penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 was sustainable where the goods were cleared without payment of duty under bogus invoices and the show-cause notice specifically alleged such contravention; (ii) whether penalty imposed on the proprietor was sustainable when penalty had been imposed on the proprietary concern.

Issue (i): Whether penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 was sustainable where the goods were cleared without payment of duty under bogus invoices and the show-cause notice specifically alleged such contravention.

Analysis: The facts were distinguished from the earlier case relied on by the appellant because, here, the clearances were made under bogus invoices. The notice specifically alleged clearance of goods without payment of duty under bogus invoices and identified the contravention of Rule 173Q. In such circumstances, the absence of a further detailed sub-clause reference did not vitiate the penalty.

Conclusion: The penalty on this ground was upheld.

Issue (ii): Whether penalty imposed on the proprietor was sustainable when penalty had been imposed on the proprietary concern.

Analysis: Since the penalty had already been imposed on the proprietary concern for the relevant contravention, the separate penalty on the proprietor was not sustained on the facts of the case.

Conclusion: The penalty on the proprietor was set aside.

Final Conclusion: The penalties on the appeals concerning the proprietary concern were sustained, while the appeal relating to the proprietor succeeded and the corresponding penalty was annulled.

Ratio Decidendi: A penalty for contravention of excise law is sustainable where the show-cause notice specifically alleges clearance of goods without payment of duty under bogus invoices, but a separate penalty on the proprietor may not be sustained when the proprietary concern has already been penalised for the same contravention.

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