Penalty under Central Excise rules upheld for duty-free removals and manufacture without the required licence

Removal of excisable goods without payment of duty, combined with failure to obtain the required licence after crossing the exemption limit, was treated as a contravention attracting penalty under Rule 173Q(1)(a) and (b). The authority noted that the goods had been cleared without duty for a substantial period and that the explanation based on earlier proceedings and the small scale of the unit did not displace the established breach. The penalty was considered properly imposed on a lenient basis and its quantum was not disturbed.

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Issues: Whether the penalty imposed under the Central Excise Rules was justified for removal of excisable goods without duty and for manufacture without obtaining the required licence.

Analysis: The appellants had crossed the exemption limit, failed to obtain the excise licence when required, and cleared excisable goods without payment of duty for a substantial period. The order treated these facts as disclosing contravention attracting Rule 173Q(1)(a) and (b), and noted that the penalty of Rs. 5,000 was modest compared with the value of the goods and was imposed on a lenient view. The explanation based on earlier proceedings and the small scale of the unit did not displace the established contraventions.

Conclusion: The penalty was held to be proper and the appeal was dismissed.

Ratio Decidendi: Where excisable goods are removed without payment of duty and the manufacturer fails to obtain the required licence after crossing the prescribed limit, penalty under Rule 173Q is warranted and its quantum will not be interfered with if it is reasonably imposed.

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