Full Judgment
3. I have heard DR Shri C. Mani who submits that for the reasons stated in the appeal, the Order-in-original should be restored.
4. On the other hand, Counsel submits that the party has been already penalised under Section 11AC and the Commissioner has not exercised his discretion in reducing the mandatory penalty which should have been done so in terms of the Apex Court judgment rendered in the case of State of Madhya Pradesh v. BHEL, 1998 (99) ELT 33. The Commissioner has however reduced the penalty under Rule 173Q by exercising his discretion on overall facts and circumstances of the case. He submits that the party was entitled for the benefit of modvat credit and deductions under Section 4(4)(d)(ii) of the Act. The Commissioner has exercised his discretion to reduce the penalty under Rule 173Q which was on overall facts and circumstances of the case and on confirmation of higher penalty under Section 11AC He relied on the judgment rendered in the case of CCE, Tricky v. CEGAT, Chennai, 2001 (133) ELT 536 by Hon'ble High Court wherein it has been held that no reference of law arises when discretion is exercised by Tribunal in reducing the penalty under Rule 173Q and also held that it was a discretion vested in the authorities to exercise the same.
5. I have carefully considered the submissions and notice that the Commissioner (Appeals) has not reduced the mandatory penalty of Rs. 1,81,985 imposed under Section 11AC. There was a discretion granted to the authorities to impose lesser mandatory penalty as held by the Apex Court in the case of State of Madhya Pradesh v. BHEL (supra). However, the Commissioner in overall facts and circumstances of the case and taking into consideration the benefit that would have accrued in duty reduction to the assessee has scaled down the penalty under Rule 173Q.Such an exercise of discretion cannot be said to be without application of mind. The Madras High Court in the case of CCE, Trichy v. CEGAT (supra) have also noted the Apex Court judgment and have opined that once the discretion has been exercised in the facts and circumstances of the case, then there will be no question of law for consideration in reference. I am inclined to accept the order of the Commissioner (Appeals) insofar as reducing the penalty under Rule 173Q is concerned.
The Commissioner has not disturbed the penalty imposed under Section 11AC and therefore it cannot be said that the Commissioner has not exercised his discretion properly. There is nothing stated in the appeal memo to the fact that there was mala fide reasons on the part of the Commissioner in exercising his discretion. In that view of the matter there is no merit in the appeal and hence it is rejected.
6. Revenue was also aggrieved with the reduction of penalty amount of Rs. 30,000 imposed on Shri N. Vadivelu to Rs. 2,000 under Rule 209A. I notice that the revenue was required to have filed a separate appeal as there was a separate appeal on Shri N. Vadivelu before Commissioner (Appeals). The present appeal is against the Company which is a separate juristic person. A separate appeal ought to have been filed in respect of the individual Shri N. Vadivelu on whom the penalty was imposed. However, adopting the reasons given supra, there is no ground to enhance the penalty on Shri N. Vadivelu. The prayer for enhancement of penalty on Shri N. Vadivelu is also rejected.