Central excise penalty relief: Tribunal applied the principle underlying Section 11AC's first proviso and reduced the penalty.

In a central excise penalty dispute, the Tribunal considered whether the penalty was excessive and whether the principle underlying the first proviso to Section 11AC of the Central Excise Act, 1944 could justify reduction. The appellants had paid the duty before issuance of the show cause notice, and although the proviso was not directly applicable to the period in question, the Tribunal applied its underlying principle to scale down the penalty. The penalty was reduced to Rs. 75,000, granting the appellant partial relief.

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Issues: Whether the penalty imposed under the Central Excise law was excessive and liable to be scaled down by applying the principle underlying the first proviso to Section 11AC of the Central Excise Act, 1944.

Analysis: The appeal challenged only the penalty. The appellants had paid the duty before issuance of the show cause notice, and the Tribunal held that although the first proviso to Section 11AC of the Central Excise Act, 1944 was not directly applicable to the earlier period in dispute, the principle embodied in it could still be applied. On that basis, the Tribunal found the penalty to be on the higher side and directed payment of a reduced amount.

Conclusion: The penalty was reduced to Rs. 75,000 and the appellant obtained partial relief.

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