High Court overturns Tribunal's decision on penalties, emphasizes statutory mandate

The High Court allowed the department's appeal, finding the Tribunal's decision to reduce penalty and interest to be legally flawed. The Supreme Court established that authorities have no discretion in imposing penalties, leading to the High Court's decision to set aside the order despite a pending decision in another case. The appellant's contentions regarding the reduction of interest and penalty were dismissed, upholding the statutory mandate for their imposition upon confirmation of the duty demanded.

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The department challenged the Tribunal's order setting aside a demand for duty with reduction of interest and penalty, despite a related decision in Sri Krishna Pipes being admitted by the Apex Court and pending consideration. The appellant argued that the Appellate Authority's reduction of interest and penalty was illegal and without jurisdiction because the statute prescribes imposition of those amounts mandatorily upon confirmation of duty. The Supreme Court, while disposing connected appeals (including the Shree Krishna Pipe matter), held that "Authorities have no discretion in the matter of imposition of penalty." Applying that precedent, the court concluded the impugned CESTAT order reducing penalty and interest is "bad in law" and consequently allowed the department's appeal.

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