Composite central excise penalty need not be quashed for lack of bifurcation; remand is proper for fresh quantification.

Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944 operate in different fields: Section 11AC applies to duty liability arising from fraud, suppression, or intent to evade, while Rule 173Q penalises specified contraventions by the manufacturer, producer, warehouse keeper, or registered dealer. Because the provisions address distinct statutory capacities and misconduct, a composite penalty is not invalid merely because the adjudicating authority did not separately apportion the quantum. The proper course, where bifurcation is not possible on the record, is remand for redetermination of penalty rather than complete deletion.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 could be set aside merely because the adjudicating authority had imposed a composite penalty under both provisions.

Analysis: Section 11AC applies to the person liable to pay duty determined under Section 11A(2) where non-levy, short-levy, short-payment or erroneous refund occurs by reason of fraud, suppression of facts or contravention with intent to evade duty. Rule 173Q operates in a different field and targets the manufacturer, producer, warehouse keeper or registered dealer for specified contraventions. The two provisions are distinct in their scope and can independently attract penalty. If a composite penalty is imposed and the exact apportionment cannot be separated between the two provisions, the proper course is to remand the matter for redetermination of the quantum of penalty, not to wipe out the penalty altogether.

Conclusion: The CESTAT was not justified in setting aside the penalty solely on the ground that it was composite. The question was answered in favour of the Revenue and against the assessee.

Ratio Decidendi: Where distinct statutory penalty provisions apply to different legal capacities or contraventions, a composite penalty cannot be annulled merely for want of bifurcation if the appropriate course is remand for determination of the correct quantum.

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