Penalty under Section 11AC cannot be reduced after findings of wilful evasion and mens rea are sustained.

Where deliberate evasion and mens rea were sustained under Section 11AC of the Central Excise Act, 1944, the Tribunal could not reduce the penalty on that basis alone. The Tribunal's reduction of penalty was disapproved because it was inconsistent with the finding of wilful evasion, and the matter was remanded for reconsideration in accordance with law.

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Issues: Whether the Tribunal could reduce the penalty under Section 11AC of the Central Excise Act, 1944 while affirming the finding of wilful evasion and mens rea.

Analysis: The penalty order under Section 11AC had been upheld on the finding of deliberate evasion, but the Tribunal reduced the penalty despite sustaining that finding. Following the decision in an identical matter, the view taken by the Tribunal was disapproved and the matter was sent back for reconsideration in accordance with law.

Conclusion: The reduction of penalty by the Tribunal was not sustained, and the matter was remanded to the Tribunal for fresh decision.

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