Procedural lapse in job-work removals does not justify major excise penalty when records show no intent to evade duty.

Removal of semi-finished goods to a hired premises for job work, when supported by challans and records, was treated as a procedural lapse rather than a clandestine clearance. In the absence of material showing mala fide intent or an attempt to evade duty, the major penalty under Rule 25(1) of the Central Excise Rules, 2002, read with the intent requirement reflected in Section 11AC of the Central Excise Act, 1944, was considered unwarranted. The technical failure to give prior intimation could still justify a limited penalty under Rule 27. The penalty was therefore reduced to a token amount for the procedural breach only.

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Issues: Whether penalty under Rule 25(1) of the Central Excise Rules, 2002 was sustainable for sending semi-finished goods to a hired premises without prior intimation, and whether the lapse warranted only a token penalty under Rule 27 of the Central Excise Rules, 2002.

Analysis: The goods were cleared for machining in the course of an admitted job-work arrangement, the movement was supported by challans and records, and there was no material showing mala fide intent or a scheme to remove the goods clandestinely. The absence of prior intimation was treated as a procedural and technical lapse rather than a contravention attracting the penal consequences under Rule 25(1). Since penalty under Rule 25(1) is read with the requirements of Section 11AC of the Central Excise Act, 1944, the absence of intent to evade duty militated against the major penalty. At the same time, the procedural lapse justified a limited penalty under Rule 27.

Conclusion: The penalty under Rule 25(1) was held to be unwarranted, and the penalty was reduced to a token penalty of Rs.5,000 each under Rule 27.

Final Conclusion: The appeals succeeded to the extent of substantial reduction of penalty, with the matter ending in a limited penal consequence for a procedural infraction only.

Ratio Decidendi: Where removal of semi-finished goods for job work is supported by records and no intent to evade duty is shown, non-intimation is a procedural lapse that does not justify penalty under Rule 25(1), though a token penalty may be imposed for the technical breach.

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