Discretionary excise debarment need not match exact revenue loss if it is not arbitrary or plainly disproportionate.

A discretionary debarment from a concessional excise duty scheme under Rule 92E(iii) was upheld because the period of disqualification need not be mathematically tied to the exact revenue loss. The Court recognised that the provision serves both a compensatory and deterrent function, especially to prevent repeated breaches, and therefore allowed room for administrative discretion. On the facts, the difference between the estimated and eventual revenue figures did not show arbitrariness or plain disproportionality. Interference under Article 136 was therefore not warranted where the sanction was shown to be neither arbitrary nor out of all proportion to the injury caused to the Revenue.

---

---

Issues: Whether the period of debarment from the concessional excise duty scheme imposed under Rule 92E(iii) was so disproportionate to the revenue loss as to warrant interference under Article 136 of the Constitution of India.

Analysis: The period of debarment under Rule 92E(iii) was left to the discretion of the authorities, subject to the requirement that the disqualification should not be out of all proportion to the injury caused to the Revenue. The Court held that the period need not be mathematically correlated to the exact revenue loss, since the rule also serves a deterrent purpose to prevent repeated breaches. On the facts, the difference between the estimated and eventual revenue figures did not establish arbitrariness in the exercise of discretion.

Conclusion: The debarment was not shown to be arbitrary or disproportionate, and interference was not warranted under Article 136.

Ratio Decidendi: Where a fiscal penalty or debarment under a discretionary excise provision is imposed to protect revenue and deter repeat defaults, the Court will not interfere merely because the period is not arithmetically equal to the assessed revenue loss, unless the decision is arbitrary or plainly disproportionate.

---