Excise penalty requires proven rule breach or deliberate evasion; mere delayed duty payment without mala fide intent is insufficient.

Penalty under Rule 173Q was held inapplicable where duty was paid late after the exemption threshold was crossed, but there was no proved contravention of the excise rules or deliberate intent to evade duty. The assessee had filed a revised classification list and paid the differential duty, and the record did not show any mala fide removal of goods in breach of the rules. On those facts, the penal provisions invoked were found irrelevant, and the penalty was set aside with refund of the amount paid.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules was leviable for delayed payment of duty where the assessee had not removed excisable goods in contravention of the rules and there was no mala fide intent to evade duty.

Analysis: The clearances were initially made under an exemption notification and the duty liability arose only when the aggregate value of clearances crossed the exemption limit. The assessee itself filed a revised classification list and paid the differential duty. The record did not show any deliberate evasion, nor any removal of goods in breach of the cited excise rules. The provisions referred to in the notice were held to have no relevance on the facts, and even the residuary penal provision could not apply because no breach of the rules was established.

Conclusion: Penalty was not leviable under Rule 173Q, and the assessee was entitled to refund of the penalty paid.

Final Conclusion: The appeal succeeded and the penalty order was set aside on the ground that delayed payment of duty, in the absence of contravention of the excise rules or any intention to evade duty, did not attract the penal provisions invoked.

Ratio Decidendi: Penalty under the excise penal rules cannot be imposed unless there is a proved contravention of the rules or conduct showing deliberate evasion of duty; a mere delayed payment, without mala fide intent and without breach of a rule, is not sufficient.

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