Penalty for removal without duty payment upheld despite no mala fides, where duty was payable during clearance

Penalty under Rule 173Q(1)(d) was considered sustainable where goods were removed without payment of duty over a prolonged period, even though the assessee claimed reliance on an exemption notification and there was no finding of mala fides. The absence of deliberate intention did not bar penalty because duty was payable throughout the relevant period and the exemption defence was rejected. A cited Tribunal decision was distinguished on the basis that duty in that case arose only later, unlike the present facts. The penalty was regarded as reasonable in view of the duty involved.

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Issues: Whether penalty under Rule 173Q(1)(d) was justified for removal of goods without payment of duty, despite the absence of mala fides and the assessee's reliance on an exemption notification.

Analysis: The goods were cleared over a prolonged period without payment of duty, and the defence based on ignorance of the non-applicability of the exemption notification was rejected. The provision applied where goods were removed without payment of duty, and the fact that there was no deliberate intention was held not to bar penalty. The earlier reliance on the cited Tribunal decision was distinguished because, in that situation, duty was not payable at the time of clearance and liability arose only later, whereas here duty was payable throughout the relevant period. The penalty already imposed was also found to be reasonable having regard to the duty involved.

Conclusion: The penalty was upheld and the challenge to its imposition failed.

Final Conclusion: The appeal failed on the question of penalty for duty-free removal of goods and the order imposing penalty was sustained.

Ratio Decidendi: Penalty is sustainable under Rule 173Q(1)(d) when goods are removed without payment of duty, and the absence of mala fides does not by itself exclude liability where duty was payable at the time of clearance.

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