Rule 173Q penalty fails where intent to evade duty is not established and Rule 226 applies instead.

Penalty under Rule 173Q of the Central Excise Rules, 1944 could not be sustained where contravention with intent to evade duty was not established. The text notes that the alleged misconduct, if any, was more appropriately covered by Rule 226, which itself prescribed the punitive consequence for that contravention. In the absence of the necessary legal foundation for invoking Rule 173Q, the demand and penalty were held unsustainable, and the revision application was allowed.

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Issues: Whether penalty and duty demand could be sustained under Rule 173Q of the Central Excise Rules, 1944, when contravention with intent to evade duty was not established and the alleged misconduct was more appropriately covered by Rule 226 of the Central Excise Rules, 1944.

Analysis: The demand proceeded under Rule 173Q, but there was no evidence establishing that its conditions, including contravention with intent to evade duty, were satisfied. The order further noted that, if any contravention of Rule 226 had occurred, that rule itself provided the punitive consequence, and a penalty under Rule 173Q could not be imposed in law without the necessary foundation.

Conclusion: The penalty under Rule 173Q was unsustainable and the revision application was allowed.

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