Penalty for changed tariff classification fails absent culpable conduct; incorrect declaration alone does not justify Rule 173Q action.

Penalty under Rule 173Q was not sustainable where the assessee initially claimed one tariff classification and later revised it during departmental scrutiny. The mere alteration of the declared heading did not, by itself, establish culpable conduct or justify penal action, particularly when the classification dispute itself was not pressed. In the absence of further aggravating circumstances showing deliberate wrongdoing, an incorrect classification claim in the declaration was held insufficient to attract penalty. The penalty was therefore set aside.

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Issues: Whether penalty under Rule 173Q could be sustained where the assessee initially claimed one tariff classification and later revised the claim during verification.

Analysis: The dispute on classification was not pressed and the matter survived only on penalty. The change in the classification claim was made in the course of scrutiny by the department, and the mere fact that the assessee altered its claimed heading did not, by itself, establish conduct warranting penalty. An incorrect classification claim in the declaration is not automatically penal in the absence of further culpable circumstances.

Conclusion: Penalty under Rule 173Q was not imposable on the assessee and the penalty was set aside.

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