2011 (3) TMI 329 - HC - Central Excise

Discretionary power - Penalty - Tribunal had in exercise of discretionary powers reduced the penalty - Reduction is warranted in a given case would not be sufficient even in exercise of discretionary powers to reduce penalty - However, in do not propose to interfere - Firstly, amount involved is not very large - Secondly, we are informed that substantial portion of duty was paid even before the issuance of show cause notice - This being mitigating circumstance, allow the issue to rest at the stage of Tribunal - Revenue appeal is dismissed accordingly.

Summary

Issues:
1. Reduction of personal penalty by the Tribunal without providing detailed reasons.
2. Exercise of discretionary powers by the Tribunal in reducing the penalty.
3. Applicability of mitigating circumstances in deciding the penalty amount.

Analysis:
1. The High Court was presented with an appeal by the Revenue against the Tribunal's decision to reduce the personal penalty of the Company's Directors from Rs. 4 lakh to Rs. 1 lakh each. The Tribunal had upheld the penalties on the company but reduced the personal penalties. The Revenue contended that the Tribunal's interference lacked detailed reasons, emphasizing that even when exercising discretionary power, the Tribunal should provide cogent explanations for altering the penalties imposed by lower authorities.

2. The counsel for the respondent argued that the Tribunal had appropriately exercised its discretionary powers, asserting that no substantial question of law arose from the decision. Upon reviewing the orders and arguments, the High Court acknowledged that the Tribunal had indeed reduced the penalty based on discretionary powers, stating that a more elaborate explanation would have been beneficial to understand the basis for the reduction. Despite the lack of detailed reasoning, the Court decided not to interfere with the Tribunal's decision due to certain factors.

3. The Court considered the circumstances of the case, noting that the amount in question was not substantial and that a significant portion of the duty had been paid before the show cause notice was issued. These mitigating circumstances influenced the Court's decision not to intervene, as they deemed it appropriate to allow the matter to conclude at the Tribunal level. Consequently, the High Court dismissed the Tax appeal, maintaining the reduced personal penalties set by the Tribunal.