Section 11AC penalty not attracted where only pilferage and substandard goods were shown, not concealment.

Section 11AC minimum penalty was found inapplicable because the facts showed pilferage and resulting substandard goods, not deliberate mis-statement or concealment by the assessee. On that footing, the penalty could be interfered with on the facts, and the Tribunal's reduction of penalty was upheld. The analysis also noted that no ground was made out to disturb the Tribunal's exercise of discretion under the excise penalty framework.

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Issues: Whether the penalty imposed in the excise proceedings was governed by the minimum penalty regime under Section 11AC of the Central Excise Act, 1944, and whether the Tribunal was justified in reducing the penalty.

Analysis: The appeal arose under Section 35G of the Central Excise Act, 1944 against the Tribunal's order reducing the penalty. The finding recorded was that the case did not fall under Section 11AC, which contemplates a minimum penalty, because the facts only showed pilferage and the resulting substandard goods, without deliberate mis-statement or concealment by the assessee. In that view, the penalty could be interfered with on the facts, and no ground was made out for disturbing the Tribunal's exercise of discretion.

Conclusion: Section 11AC was held inapplicable on the facts, and the reduction of penalty by the Tribunal was upheld.

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