Appellate authority's power to enhance penalty under customs law remains valid where notice and hearing are given.

Section 128A(2) of the Customs Act expressly empowers the appellate authority to enhance penalty, provided the affected party is given notice and a hearing. That power is not restricted by the fact that no departmental appeal was filed, and the construction is supported by the analogous enhancement power under the income-tax appellate scheme. The commentary concludes that enhancement of penalty is legally valid when procedural safeguards are observed, and the contrary view is erroneous.

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Issues: Whether the appellate authority had power under Section 128A(2) of the Customs Act, 1962 to enhance the penalty after giving an opportunity of hearing.

Analysis: Section 128A(2) expressly confers on the appellate authority the power to enhance the levy of penalty, subject to notice and opportunity to the affected party. The absence of a departmental appeal does not cut down that statutory power. The analogy drawn with the power of enhancement under the income-tax appellate scheme supports the construction that the appellate authority may enhance the penalty in an assessee's appeal, provided procedural safeguards are observed.

Conclusion: The power of enhancement existed and was validly exercisable. The contrary view was held to be erroneous and the challenge to the enhanced penalty failed.

Final Conclusion: The appellate authority's order enhancing the penalty was sustained in law and the writ appeal succeeded.

Ratio Decidendi: Where a statute expressly authorises the appellate authority to enhance penalty after giving an opportunity of hearing, that power cannot be denied merely because the appeal was not filed by the department.

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