Central Excise penalty set aside where limited remand and no deliberate suppression justified no penal action.

Penalty under Central Excise law was unsustainable where the remand from the higher court was confined to limitation and valuation, and the adjudicating authority nonetheless imposed penalty without a proper basis in the remand directions. The record showed that the relevant facts were already within departmental knowledge, and no deliberate suppression was established for penal action. On the accepted facts, the absence of a requirement to enter moulding powder in RG-1 also weakened the penalty case. As the extended period of limitation was not upheld, the penalty was set aside, while the duty and interest demand was maintained.

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Issues: Whether the penalty imposed under the Central Excise law was sustainable when the remand from the higher court was confined to limitation and valuation, and when the extended period of limitation was not upheld.

Analysis: The remand was limited to the questions of limitation and valuation. The adjudicating authority, while considering those directions, imposed penalty even though the demand was held to be within the normal period. The penalty was therefore not a necessary consequence of the remand issues. The matter also disclosed that the activity and the relevant facts were already within the department's knowledge, and the record did not justify a finding of deliberate suppression for penalty purposes. The absence of a requirement to enter the moulding powder in RG-1, on the facts accepted, further weakened the foundation for penalty. Since the extended period was not applied, the penalty could not be sustained on the reasoning adopted.

Conclusion: The penalty was set aside as beyond the remand and not leviable on the merits.

Final Conclusion: The duty and interest demand was maintained, but the assessee obtained relief against the penalty, resulting in a partial allowance of the appeal.

Ratio Decidendi: Penalty cannot be sustained where it is imposed outside the scope of a limited remand and the case does not establish the ingredients justifying penal action, particularly when extended limitation is not applied.

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