Rule 173Q penalty failed where total molasses stock matched records and only tank-wise stock-card defects remained.

Penalty under Rule 173Q was found unsustainable where the total stock of molasses matched the RG 1 register and the discrepancy related only to tank-wise stock cards maintained under Rule 223. Because the overall quantity in the three tanks tallied with the recorded balance, the basis for confiscation and duty demand fell away. The lapse was treated as a record-keeping defect of a technical nature, and the existence of a specific provision for the relevant breach meant the larger penalty under Rule 173Q was not justified.

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Issues: Whether penalty under Rule 173Q could be sustained where the total stock of molasses matched the RG 1 register and the discrepancy related only to the stock cards maintained tank-wise under Rule 223.

Analysis: Once the total quantity of molasses in the three tanks was accepted as tallying with the recorded balance, the foundation for confiscation and duty demand disappeared. The remaining lapse related only to the manner in which stock cards were maintained for individual tanks. In the presence of a specific provision dealing with breach of the relevant record-keeping requirement, the case did not justify the larger penalty imposed under Rule 173Q. On the facts, the defect was at most a technical violation.

Conclusion: Penalty under Rule 173Q could not be sustained and was rightly set aside in favour of the assessee.

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