Excise penalty discretion must reflect proportionality and mitigating factors; reasoned reductions are not disturbed without perversity.

Excise penalty quantum may be upheld where the adjudicating authority exercises discretion on relevant mitigating factors and records reasons. The Tribunal noted that acceptance of duty liability, part payment of the demand, and the view that the penalty should be cautionary rather than retributive justified a reduced penalty. Where the order is reasoned and reflects proportionality to the gravity of the offence, appellate interference is not warranted merely because the Revenue considers the penalty too low. The enhancement request was rejected.

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Issues: Whether the penalty of Rs. 40,000 imposed on the assessee for excise duty evasion was inadequate and warranted enhancement in appeal.

Analysis: The adjudicating authority had imposed a reduced penalty after recording mitigating circumstances, including the assessee's acceptance of duty liability, part payment of the demand, and the view that the penalty should be cautionary rather than retributive. The Tribunal held that the authority had discretion in determining penalty quantum, subject to the requirement that the punishment remain proportionate to the gravity of the offence. Since the order disclosed relevant reasons and did not suffer from perversity, mala fides, or absence of consideration of relevant factors, no interference was justified.

Conclusion: The appeal for enhancement of penalty was rejected and the assessee succeeded.

Final Conclusion: A reasoned penalty order based on mitigating circumstances and proportionality will not be interfered with merely because the Revenue considers the penalty to be low.

Ratio Decidendi: Penalty under the excise law must be proportionate to the offence, and where the authority has exercised its discretion on the basis of relevant mitigating circumstances, appellate interference is unwarranted absent perversity, mala fides, or failure of reasons.

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