Isaac Parsons, 19, was accused of holding a get-together at his Wiltshire home last year, which police said had between 80 and 100 people in attendance.
On September 4 police posted on Facebook they had issued the £10,000 notice - which would result in a criminal record - for the party after officers were called to the house in Devizes.
At the time, it was an offence to hold a gathering of more than 30 people in a private dwelling, and the teenager had been charged under the Coronavirus Regulations.
The fine was initially appealed by the family and yesterday their solicitor asked for a dismissal ahead of the trial - on the grounds that the wrong sections of law were quoted in the fixed penalty notice.
The Crown Prosecution Service wanted to amend this, but the District Judge at Swindon Magistrates Court refused - stating the case wouldn't have ever come to court if the correct law was used and a £100 fine was issued.