Duty demand sustained, but penalty reduced where the breach was procedural and no deliberate intent to evade duty was shown.

Duty liability on the goods cleared and the items lying in the factory was accepted in substance, so the extended-time-limit demand was sustained and no basis was found to disturb its confirmation. The penalty, however, was reduced substantially because the assessee was a training centre operating on a no-profit-no-loss basis, the breach was procedural rather than deliberate, and duty was paid when pointed out by the department. The decision reflects a proportional approach: accepted duty liability supports confirmation of demand, but the absence of intent to evade can justify reduction of penalty.

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Issues: (i) Whether the duty demand confirmed under the extended time limit was sustainable; and (ii) whether the penalty imposed for procedural violations required reduction.

Issue (i): Whether the duty demand confirmed under the extended time limit was sustainable.

Analysis: The appellants did not contest liability to duty on the goods cleared and on the items lying in the factory. The demand was upheld on the basis that the clearances attracted duty and the liability had been accepted in substance. No ground was made out to interfere with the confirmation of duty.

Conclusion: The confirmation of duty demand was sustained.

Issue (ii): Whether the penalty imposed for procedural violations required reduction.

Analysis: The appellants were a training centre run on a no-profit-no-loss basis and the record did not show deliberate removal with intent to evade duty. The lapse was treated as procedural, and the duty was paid when pointed out by the department. In these circumstances, the penalty was considered excessive.

Conclusion: The penalty was reduced substantially.

Final Conclusion: The duty demand remained confirmed, but the penalty was modified downward in view of the procedural nature of the breach and the absence of deliberate evasion.

Ratio Decidendi: Where duty liability is accepted and the breach is found to be procedural without deliberate intent to evade, the duty demand may be sustained while the penalty can be reduced on proportionality grounds.

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