Mandatory central excise penalty applied where statutory conditions were met; Tribunal could not reduce the levy

Penalty under Section 11AC of the Central Excise Act, 1944 and Rule 173-Q of the Central Excise Rules, 1944 was treated as mandatory once the statutory conditions for levy were satisfied. The controlling Supreme Court authority left no discretion to the adjudicating authority or the Tribunal to impose a lesser penalty in such cases. On that basis, the reduction of penalty by the Tribunal was held unsustainable, and the penalty originally imposed was restored.

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Issues: Whether the Tribunal was justified in reducing the penalty imposed under Section 11AC of the Central Excise Act, 1944 and Rule 173-Q of the Central Excise Rules, 1944.

Analysis: The penalty provision under Section 11AC and the connected rule was held to be mandatory in nature. In view of the controlling Supreme Court authority, the adjudicating authority and the Tribunal had no discretion to impose a lesser penalty once the statutory conditions for levy of penalty were attracted.

Conclusion: The reduction of penalty by the Tribunal was unsustainable and the penalty imposed by the original authority was restored.

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