Mandatory penalty under Central Excise law cannot be reduced where statutory ingredients are satisfied, despite remand for fresh hearing.

Penalty under Section 11AC of the Central Excise Act was examined with reference to the statutory ingredients and the Supreme Court's interpretation of penalty under the central excise framework. The Tribunal stated that, where the demand survives on the basis of the ingredients under Section 11A, there is no discretion to reduce the penalty. It nevertheless remanded the matter to the adjudicating authority for fresh consideration of the penalty issue after granting a fair hearing, so that the penalty elements could be re-examined in accordance with law.

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Issues: Whether the reduction of penalty under Section 11AC of the Central Excise Act, 1944 was sustainable and whether the matter required remand for fresh consideration of the penalty elements.

Analysis: The appeal concerned Revenue's grievance against reduction of penalty after confirmation of duty. The Tribunal noted that the question of penalty had to be examined in the light of the statutory ingredients and the law declared by the Supreme Court in the context of Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. It held that once the demand survives on the basis of the ingredients under Section 11A of the Central Excise Act, 1944, there is no scope for discretion to reduce the penalty. At the same time, the matter was sent back for a fresh decision by the adjudicating authority after affording a fair hearing.

Conclusion: The issue was remanded for fresh adjudication of penalty, with the view that, if the statutory ingredients are satisfied, reduction of penalty is not permissible.

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