Binding Tribunal precedent and proportional penalty reduction sustained in dispute over removal of inputs and duty treatment.

Removal of inputs under the governing credit rules was treated as duty-compliant where the impugned order followed earlier Tribunal rulings that remained binding unless stayed or set aside, so the Revenue's challenge to the duty treatment failed. Reduction of penalty under section 11AC was also upheld because it was proportionate to the substantially reduced demand and no separate error in discretion was shown. The Commissioner (Appeals) was therefore justified in sustaining the duty position and the reduced penalty, and the appeal failed on both issues.

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Issues: (i) whether duty was payable on removal of inputs at the stage and in the manner adopted by the assessee under the governing credit rules; (ii) whether the reduction of penalty under section 11AC was justified.

Issue (i): whether duty was payable on removal of inputs at the stage and in the manner adopted by the assessee under the governing credit rules.

Analysis: The impugned order had followed earlier Tribunal decisions interpreting the relevant credit provisions governing removal of inputs, and one such decision had already been carried in appeal before the Supreme Court without being overturned. An order passed in accordance with the Tribunal's ratio remains binding on the authorities unless it is stayed or reversed. On that basis, the Commissioner (Appeals) was justified in rejecting the Revenue's challenge to the duty treatment of the removals.

Conclusion: The issue is decided against the Revenue.

Issue (ii): whether the reduction of penalty under section 11AC was justified.

Analysis: The penalty was reduced in the impugned order in the context of the substantially reduced demand. The appellate authority found no unreasonableness in that reduction, and no separate ground showing error in the exercise of discretion was made out.

Conclusion: The issue is decided against the Revenue.

Final Conclusion: The appeal fails on both the duty and penalty issues, and the order of the Commissioner (Appeals) is sustained.

Ratio Decidendi: A decision rendered in conformity with an existing Tribunal ruling remains binding on subordinate authorities unless the ruling is stayed or set aside, and a proportionate reduction of penalty may be sustained where the underlying demand stands reduced.

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