Penalty provisions using "not exceeding" set only a maximum limit, allowing reduced penalty at authority's discretion.

Penalty provisions framed with the words "not exceeding" in rule 13(i) of the Cenvat Credit Excise Rules, 2002 and rule 26 of the Central Excise Rules, 2002 prescribe only a maximum ceiling and do not create a minimum mandatory penalty. The quantum below that ceiling remains within the adjudicating authority's discretion, depending on the facts of the case. On that footing, reduction of penalty by the Commissioner (Appeals) was permissible, and the challenge to the reduced penalty failed. The appeal was dismissed and the impugned order was left undisturbed.

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Issues: Whether rule 13(i) of the Cenvat Credit Excise Rules, 2002 and rule 26 of the Central Excise Rules, 2002 prescribe a minimum penalty or only a maximum penalty, and whether reduction of penalty by the Commissioner (Appeals) was impermissible.

Analysis: The relevant expressions in both provisions are "not exceeding" and therefore fix only the upper limit of penalty. Neither provision lays down a minimum mandatory penalty. The amount of penalty below that ceiling remains within the discretion of the adjudicating authority, subject to the facts of the case.

Conclusion: The provisions do not mandate a minimum penalty, and the reduction of penalty was valid. The challenge to the order failed.

Final Conclusion: The appeal was dismissed, and the penalty reduction in the impugned order was left undisturbed.

Ratio Decidendi: Where a penalty provision uses the expression "not exceeding," it prescribes only the maximum penalty and leaves the quantum below that limit to the authority's discretion.

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