Penalty reduction requires clear statutory basis; unclear appellate relief was remanded for fresh consideration and hearing.

Reduction of penalty by the Commissioner (Appeals) was found unsustainable because the appellate order did not specify whether the relief related to penalty under Sections 76 or 78 of the Finance Act, 1994, and did not address the mandatory penalty principles referred to from Section 11AC of the Central Excise Act, 1944. The lack of a clear statutory basis left the order insufficient for appellate scrutiny. The matter was remanded to the Commissioner (Appeals) for fresh consideration after dealing with the Revenue's grounds and hearing both sides.

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Issues: Whether the reduction of penalty by the Commissioner (Appeals) without specifying the exact statutory provision under which the penalty was reduced was sustainable.

Analysis: The penalty had been imposed under Sections 76 and 78 of the Finance Act, 1994, but the appellate order reduced it without clarifying whether the reduction related to Section 76 or Section 78. The order also did not address the effect of mandatory penalty principles referred to from Section 11AC of the Central Excise Act, 1944. In the absence of clear findings on the statutory basis for reduction, the order lacked the necessary clarity for appellate scrutiny.

Conclusion: The reduction of penalty was not upheld and the matter was remanded to the Commissioner (Appeals) for fresh consideration after dealing with the Revenue's grounds and giving both sides an opportunity of hearing.

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