Discretionary penalty within a statutory range cannot be raised to the maximum without factual justification.

Where a statutory penalty is prescribed within a range, the authority must exercise discretion reasonably and on the facts before enhancing the levy. The revisional interference with the appellate order was justified because the quantity deficit was undisputed and the appellate acceptance of the shortage explanation was found erroneous, so restoration of the penalty imposed by the original authority was upheld. However, the enhancement to the statutory maximum of three times the tax was arbitrary on the facts, and the lesser original penalty was treated as just and reasonable. The result was restoration of the original penalty amount, not the maximum penalty.

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Issues: (i) whether the revisional authority was justified in setting aside the first appellate authority's order and restoring the finding on penalty; (ii) whether penalty at the maximum rate of three times the tax was warranted under the statutory scheme.

Issue (i): whether the revisional authority was justified in setting aside the first appellate authority's order and restoring the finding on penalty?

Analysis: The quantity deficit in the intercepted consignment was not in dispute. The explanation for the shortage was not accepted by the original authority, and the appellate authority's acceptance of that explanation was found erroneous. The revisional authority was therefore justified in interfering with the appellate order and restoring the penalty imposed by the original authority.

Conclusion: The revisional interference was upheld and is in favour of the Revenue.

Issue (ii): whether penalty at the maximum rate of three times the tax was warranted under the statutory scheme?

Analysis: The statutory provision permitted a penalty ranging from not less than the tax amount up to a maximum of three times the tax. The power to choose the quantum within that range was discretionary and had to be exercised reasonably. Enhancement to the maximum was found to be arbitrary on the facts, and the original authority's lesser penalty was treated as just and reasonable.

Conclusion: The maximum penalty of three times the tax was not justified, and the original penalty was restored in favour of the Assessee.

Final Conclusion: The challenge succeeded only to the extent of reduction of penalty, while the revisional order interfering with the appellate order was maintained; the matter ended with restoration of the original penalty amount.

Ratio Decidendi: Where the statute prescribes a discretionary penalty range, the authority must exercise that discretion reasonably and cannot mechanically enhance the penalty to the maximum without justification on the facts.

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