Mandatory penalty under Central Excise law required merits-based consideration for the post-23 July 1996 period.

The Tribunal was required to adjudicate the Revenue's challenge to the levy of mandatory penalty under Rule 57-I(4) of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 for the period after 23 July 1996. Because the penalty provision had come into force for that subsequent period and the ground had been expressly raised, the matter called for a reasoned determination on merits rather than confinement to the pre-23 July 1996 period. The Tribunal's order was set aside to that extent, and the issue of penalty for the post-23 July 1996 period was remitted for reconsideration in accordance with law.

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Issues: Whether the Tribunal was required to consider the Revenue's challenge to the levy of mandatory penalty under Rule 57-I(4) of the Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944 for the period after 23-7-1996.

Analysis: The appeal before the Tribunal specifically questioned the setting aside of mandatory penalty for the post-introduction period of the penal provision. The Tribunal confined itself to the period prior to the date from which the provision came into force and did not examine the Revenue's contention regarding the subsequent period. As the ground was expressly raised, the issue required a reasoned determination on merits.

Conclusion: The Tribunal's order was set aside to that extent and the matter was remitted for reconsideration of the levy of penalty for the period after 23-7-1996 in accordance with law.

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