Rule 173Q penalty and vague notice rejected where returned goods were reconditioned and cleared under Rule 173H.

Penalty under Rule 173Q of the Central Excise Rules, 1944 was found inapplicable where returned finished goods were brought back under D-3 declaration, reconditioned, and cleared under Rule 173H without duty, as the facts showed no intention to remove goods without payment of duty and Rule 173H was treated as avoiding double duty. The notice was also regarded as vague because it did not specify the exact contravention, despite Rule 173Q containing multiple substantive clauses. On these grounds, the penalty was held not exigible and the revenue challenge failed.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules, 1944 was attracted in a case where finished goods were returned by buyers, reconditioned and cleared under Rule 173H of the Central Excise Rules, 1944, and whether the show cause notice suffered from vagueness for want of specific allegation of violation.

Analysis: The appeal concerned deletion of penalty imposed on the assessee. The returned goods had been brought back through D-3 declaration, reconditioned and cleared without duty in terms of Rule 173H. On these facts, the Tribunal found no intention to remove goods without payment of duty and held that Rule 173H was intended to avoid double payment of duty. It further held that Rule 173Q(1)(a) to (c) was not attracted and that a penal notice under Rule 173Q had to specify the exact violation, as the provision contains multiple substantive clauses. The notice was treated as vague because it did not allege a clear and specific contravention.

Conclusion: Penalty was not exigible and the revenue's appeal was without merit.

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