Whether Appellate authority has empowered to increase the penalty? Whether Appellate authority can impose a fresh penalty?

20 - Interest and Penalty

No. In the case of Ghanshyam Textiles [2006 (10) TMI 423 - CESTAT MUMBAI] , it was held that penalty imposed by the Commissioner (Appeals) is unduly harsh. I therefore, following the ratio of the AR. Ashish V Patil [2006 (2) TMI 627 - CESTAT MUMBAI] , set aside the impugned order and restore the penalty amount under section 76 of the Finance Act, 1994 to the originally determined amount. 

In the case of AR Ashish V Patil [2006 (2) TMI 627 - CESTAT MUMBAI], it was held that appellant has paid the tax amount in full and also the interest amount which is about 30% of the tax amount. As such, any pecuniary advantage gained by the appellant is neutralised by payment of interest. The appellant’s case squarely falls under the provision of section 80 of the Finance Act, 1994. The appellant being a small taxpayer, the revised penalty imposed by the Commissioner is unduly harsh on him. Accordingly, I set aside the impugned order and restore the penalty amount under section 76 of the Finance Act, 1994 to the originally determined amount of ₹ 4,000 by the adjudicating authority.

Dated: 6-4-2015