Statutory penalty under excise law cannot be diluted merely because the amount is high, despite binding precedent.

The Tribunal could not lawfully reduce a penalty under Section 11AC of the Central Excise Act where binding Supreme Court precedents, relied upon by the Revenue, had already settled the penalty position. The dispute arose from wrongful availment of MODVAT credit, and the High Court noted that the Tribunal had diluted the statutory penalty merely because the amount was high, which was inconsistent with those authorities. The reduction of penalty was therefore not sustainable, the Tribunal's order was set aside, and the matter was remanded for fresh decision on merits in accordance with law.

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Issues: Whether the Tribunal could sustain reduction of penalty under Section 11AC of the Central Excise Act, 1944 in the face of the binding Supreme Court decisions relied upon by the Revenue.

Analysis: The appeal challenged the Tribunal's order reducing penalty imposed for wrongful availment of MODVAT credit. The Revenue relied on Supreme Court authority to contend that once the legal conditions for penalty were established, the Tribunal had no jurisdiction to dilute the statutory penalty merely on the ground that the amount was high. The impugned order was found to be inconsistent with the cited binding precedents.

Conclusion: The Tribunal's order reducing penalty could not be sustained and was set aside. The matter was remanded to the Tribunal for fresh decision on merits in accordance with law.

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