Personal penalty for clerical excise record errors was set aside where mistakes were inadvertent and promptly disclosed.

Personal penalty under Rule 173Q of the Central Excise Rules, 1944 was found unsustainable where the alleged Rule 9(1) contraventions arose from clerical and accounting errors in excise records. The non-debiting of duty in RG 23A Part II and the clearance against an insufficient credit balance were treated as inadvertent mistakes in a newly started small-scale unit maintaining manual records. Because the duty was shown in the excise documents, the errors were promptly disclosed to the department, and there was no indication of deliberate evasion, the contraventions were regarded as technical and procedural only. The penalty was set aside and relief was granted to the assessee.

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Issues: Whether personal penalty under Rule 173Q of the Central Excise Rules, 1944 was sustainable for the alleged contravention of Rule 9(1) of the Central Excise Rules, 1944 arising from clerical and accounting errors in the excise records.

Analysis: The penalty was based on non-debiting of duty in RG 23A Part II in one matter and on clearance against an insufficient credit balance in the other. The errors were explained as inadvertent clerical mistakes, detected and corrected by the assessee on its own, in a newly started small-scale unit maintaining records manually. The duty was reflected in the excise documents, the mistakes were promptly brought to the notice of the department, and the contraventions were treated as technical and procedural rather than deliberate evasion.

Conclusion: The penalty was not justified and was set aside; the appeals were allowed in favour of the assessee.

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