Excise valuation penalty: job worker remains liable for under-valuation, while duplicate Rule 25 penalty is unsustainable.

A job worker is liable as the manufacturer for correct excise valuation and duty compliance; failure to receive costing data from the principal does not by itself negate penalty where no intimation was given to the department and provisional assessment was not sought. On those facts, the ingredients for penalty under Section 11AC were found to exist, but the assessee was entitled to the statutory reduced penalty of 25% subject to compliance with the prescribed conditions. Once Section 11AC penalty was imposed for the same default, a separate penalty under Rule 25 was not warranted and was set aside.

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Issues: (i) Whether penalty under Section 11AC was sustainable where the short payment of duty arose from undervaluation in job-work clearances and the assessee had not taken provisional assessment. (ii) Whether the separate penalty imposed under Rule 25 could survive once penalty under Section 11AC was upheld.

Issue (i): Whether penalty under Section 11AC was sustainable where the short payment of duty arose from undervaluation in job-work clearances and the assessee had not taken provisional assessment.

Analysis: The job worker was treated as the manufacturer for central excise purposes and remained responsible for correct valuation and duty compliance. Non-supply of costing data by the principal did not exonerate the assessee, especially when no intimation was given to the department and the assessee did not resort to provisional assessment. On these facts, bona fides were not established and the ingredients for penalty were held to exist.

Conclusion: Penalty under Section 11AC was justified, but the assessee was entitled to the statutory benefit of reduced penalty at 25% on compliance with the specified conditions.

Issue (ii): Whether the separate penalty imposed under Rule 25 could survive once penalty under Section 11AC was upheld.

Analysis: The Tribunal held that once penalty under Section 11AC was imposed for the same default, further penalty under Rule 25 was not warranted.

Conclusion: The penalty under Rule 25 was set aside.

Final Conclusion: The appeal succeeded only to the limited extent of deletion of the Rule 25 penalty and reduction of the Section 11AC penalty to 25% subject to compliance with the stated conditions.

Ratio Decidendi: A job worker remains liable for correct excise valuation and cannot avoid penalty by relying on the principal's failure to supply costing data, but where penalty under Section 11AC applies, a further penalty for the same default is not warranted and the assessee is entitled to the statutory reduced-penalty benefit if conditions are met.

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