Procedural compliance in goods retesting records defeated penalty where the assessee regularly informed the department.

Penalty for an alleged procedural lapse was unsustainable where the assessee maintained RG-1 and return records for goods transferred for retesting and regularly forwarded those records to the department. As the prescribed procedure was substantially complied with and the department had been kept informed on a monthly basis, the basis for invoking penalty was not established. The penalty recovery was stayed and the impugned order was set aside in favour of the assessee.

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Issues: Whether penalty could be sustained for the alleged procedural lapse when the appellant maintained records of transfer of goods for retesting and the department was regularly informed.

Analysis: The appellant showed that the goods sent for retesting were entered in the RG-1 register and in the relevant return vouchers, and that the records were forwarded to the department on a monthly basis. In these circumstances, the basis for invoking penalty, namely non-compliance with the prescribed procedure, was not made out.

Conclusion: Penalty was not justified and the recovery of the penalty amount was stayed and the impugned order was set aside in favour of the assessee.

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