Excise procedural lapses without intent to evade duty did not justify penalties; technical breaches were set aside.

Penalties for excise procedural contraventions were held unsustainable where the assessee had obtained registration, paid duty on clearances, and regularised omissions. Although there were lapses in return filing, invoice pre-authentication, declarations, register pre-authentication, and account maintenance, there was no material showing clandestine removal or any deliberate intent to evade duty. The breaches were treated as technical and procedural rather than mala fide, and the principle against imposing penalty for a mere venial breach was applied. The penalties were set aside in favour of the assessee.

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Issues: Whether penalties imposed for contravention of excise procedural rules were sustainable when the lapses were stated to be technical, the assessee was new to excise procedure, and the duty liability had not been shown to have been evaded.

Analysis: The record showed that the assessee had obtained registration, had paid duty on clearances, and had regularised omissions wherever they occurred. The contraventions related to filing of returns, invoice pre-authentication, declarations, pre-authentication of registers, and maintenance of accounts, but there was no material to show clandestine removal or a deliberate design to evade duty. In these circumstances, the breaches were treated as procedural and not mala fide, and the principle that penalty should not be imposed for a mere technical or venial breach was applied.

Conclusion: The penalties were not sustainable and were set aside in favour of the assessee.

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