Proportionate penalty under Rule 209A requires reasoned discretion; excessive penalties may be reduced or set aside.

Penalty under Rule 209A must reflect a reasoned, judicious and proportionate exercise of discretion. The article notes that dealers were penalised for allegedly receiving goods without payment of duty, but the penalties were imposed without adequate reasons and bore no rational relation to the low value of the goods involved. One penalty was also imposed although no duty-free goods were seized from the relevant premises. While the plea that the goods were duty free was rejected, the penalties on three appellants were substantially reduced to nominal amounts, and the penalty on the appellant from whose premises no goods were seized was set aside.

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Issues: Whether the penalties imposed under Rule 209A were excessive and liable to be reduced or set aside.

Analysis: The appellants were dealers alleged to have received goods without payment of duty. The penalties of Rs. 10 lakhs each were imposed despite the very low value of the seized goods in the respective cases, and one penalty was levied even though no duty-free goods were seized from the premises concerned. The order contained no reasons justifying such extreme penalties. In matters of penalty, the quasi-judicial authority must exercise discretion fairly, apply its mind, and assign reasons. While the plea that the goods were duty free was not accepted, the penalty had to bear a rational relation to the facts and value involved.

Conclusion: The penalties on three appellants were substantially reduced to nominal amounts, and the penalty imposed on the appellant from whose premises no goods were seized was set aside.

Final Conclusion: The common order was modified to the limited extent of reducing the penalties in three appeals and annulling the penalty in the fourth appeal.

Ratio Decidendi: Penalty under Rule 209A must be imposed by a reasoned and judicious exercise of discretion and should be proportionate to the facts and circumstances of the case.

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