SSI Exemption and RG-1 Non-Maintenance: Fine and penalty could not stand without duty liability or a section 11AC allegation.

Redemption fine and penalty for non-maintenance of the RG-1 register were held unsustainable where the goods were found eligible for SSI exemption and no duty was payable. The adjudicating authority had not alleged any contravention under section 11AC, so Rule 173Q of the Central Excise Rules, 1944 could not be invoked on those facts. Reliance on shortage cases was distinguishable because this dispute did not concern duty liability on unaccounted goods. The fine and penalty were therefore set aside in favour of the assessee.

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Issues: Whether redemption fine and penalty were leviable for non-maintenance of RG-1 register when the goods were held eligible for SSI exemption and no contravention under section 11AC was alleged.

Analysis: The proceedings related to non-entry of manufactured goods in RG-1 register. The adjudicating authority had recorded that the appellant was entitled to SSI exemption, which meant that no duty was payable on the goods. In the absence of any allegation of contravention under section 11AC of the Act, the penal provision under Rule 173Q of the Central Excise Rules, 1944 could not be invoked on the facts. The earlier reliance placed on shortage cases was found distinguishable because the present matter did not involve duty liability on unaccounted goods.

Conclusion: Redemption fine and penalty were not sustainable and were set aside in favour of the assessee.

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