Rule 173Q penalty fails where a classification list omission is merely technical and no intent to evade duty exists.

Penalty under Rule 173Q of the Central Excise Rules is stated to be unsustainable where the only lapse is failure to include an item in the classification list and there is no intent to evade duty. On the admitted facts, the flux materials were eligible for exemption when captively used in the manufacture of welding electrodes, so the omission caused no revenue loss or evasion. The text treats a mere technical contravention, without evasion intent, as insufficient to justify penal action, and records that the penalty order was set aside.

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Issues: Whether penalty under Rule 173Q of the Central Excise Rules was sustainable where the omission to file the classification list was only technical and there was no intention to evade duty.

Analysis: The flux materials were undisputedly eligible for exemption when used captively in the manufacture of welding electrodes. On that admitted factual position, failure to declare the item in the classification list did not result in any revenue evasion. Penalty under Rule 173Q is attracted only where the contravention is with intent to evade duty, and a mere technical omission without such intent cannot support penal action.

Conclusion: Penalty under Rule 173Q was not legally permissible and could not be sustained. The appeal was therefore allowed and the penalty order set aside.

Ratio Decidendi: Penalty under Rule 173Q cannot be imposed for a mere technical lapse unless the contravention is accompanied by an intention to evade duty.

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