Excise contravention and penalty quantum reduced while duty liability remained confirmed on the facts.

Removal of excisable goods without filing the relevant classification or price lists and without complying with excise formalities supported a finding of contravention under Rule 173Q. The duty liability was nevertheless confirmed because duty had already been paid, while Modvat credit had been availed. On the facts, the original penalty was found excessive and was reduced from Rs. 1,00,000 to Rs. 50,000, with only the quantum of penalty being interfered with and the substantive duty demand left undisturbed.

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Issues: Whether the penalty of Rs. 1,00,000 imposed under Rule 173Q of the Central Excise Rules was justified in the facts of the case, where the duty had been paid and Modvat credit had been availed.

Analysis: The goods were removed without filing the relevant classification or price lists and without excise formalities, which supported the finding of contravention. At the same time, the duty had already been deposited and credit had been taken, and the circumstances warranted interference only with the quantum of penalty rather than with the demand itself.

Conclusion: The penalty was not sustained at the original amount and was reduced to Rs. 50,000; the demand of duty was confirmed.

Final Conclusion: The appeal succeeded only to the limited extent of reduction in penalty, while the substantive duty liability remained undisturbed.

Ratio Decidendi: Where duty liability is confirmed but the surrounding facts do not justify the original penal quantum, the penalty may be reduced while maintaining the finding of contravention.

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