TAX CASE No.20 OF 2001 (Against order No.S-371, A-411/Kol/2001 dated 21.6.2001 passed by Mrs.Archana Wadhwa, Member (Judicial) of the Customs, Excise and Gold (Control) Appellate Tribunal, Eastern Bench, Calcutta in Stay Petition No.602 /2000 and Appeal No.E-518 of 2000) --------- COMMISSIONER,CENTRAL EXCISE,PATNA----------------Applicant Versus M/S ASIAN PLYWOOD INDUSTRIES((P) Ltd.------------Respondent --------- For the Applicant : Mr.Rakesh Kumar Singh, Central Government Standing Counsel. For the Respondent : None. ------- P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN ---------- Prasad & Ranjan, JJ: M/s Asian Plywood Industries (Private) Limited (hereinafter referred to as the “manufacturer”) manufactures wood and articles of wood classifiable under Chapter 44 of the Central Excise Tariff. The preventive Officers of the Central Excise Headquarters, upon an intelligence report, visited the manufacturer’s factory and conducted various checks and verification. It was found that RG-I register was not written upto- date and certain private records maintained by the manufacturer reflected actual production and clearance of final products on day-to-day basis. Physical stock taking of the finished goods was undertaken and it was found that the stock was short than the actual recorded balance in the RG-I register. The statements of Supervisor of the manufacturer company, namely, Rudal Singh 2 as also P.S.Yadav, Person-in-charge of the Excise work were recorded. Informations were also sought for from the buyers of the manufacturer and in the process the statement of one Iqbal Ahmad, Proprietor of M/s Ply-way, Patna was recorded. On the basis of the aforesaid fact, the manufacturer was served with a show cause notice dated 20th of August, 1998 alleging clandestine removal of the goods valued at Rs.8,67,700=40 without payment of duty of Rs.1,63,556=54. The notice proposed confirmation of demand of duty with the imposition of personal penalty and interest under the provisions of Section 11AB of the Central Excise Act. On consideration of the material, the Additional Commissioner confirmed demand of duty as also personal penalty alongwith the interest. Manufacturer’s appeal against the order of Additional Commissioner also failed. It is relevant here to state that the Additional Commissioner had imposed personal penalty of Rs.1,63,556=54 which was affirmed in appeal by the Commissioner. Manufacturer then preferred appeal before the Custom, Excise and Gold (Control) Appellate Tribunal, Calcutta (hereinafter referred to as the “Tribunal”). The Tribunal on appraisal of the material affirmed the order of the Additional Commissioner and Commissioner (Appeals) so far as the clandestine removal of goods is concerned, but reduced the amount of personal penalty to Rs.75,000=00. While doing so, the Tribunal had observed as follows: “However, in the facts and circumstances of 3 the case of the quantum of personal penalty imposed upon the appellants, is reduced from Rs.1,63,556.54 to Rs.75,000.00 (Rupees seventy-five thousand) only. But for the above modification in the quantum of penalty, the appeal is otherwise rejected. Stay petition also stands disposed of.” Aggrieved by the same, the Commissioner of Central Excise has preferred this application under Section 35-H of the Central Excise Act, 1944. This Court by order dated 12.1.2004, in exercise of the power under Section 35H(4) of the Act, directed the Tribunal to draw the statement of facts and refer the following question of law for determination : “Whether the Tribunal after having dismissed the appeal on merit after coming to the finding that the demand was validly made by the Department was justified in interfering with the quantum of personal penalty and reducing the same contrary to the provisions contained under section 11AC of the Central Excise Act without assigning any reason much less valid reason ? Mr.Rakesh Kumar Singh, Central Government Counsel, appearing on behalf of the applicant submits that even if it is assumed that the Tribunal has right and jurisdiction to reduce the personal penalty, it can do so only after assigning good and valid reason. Despite service of notice on respondent, nobody has chosen to appear on its behalf. We have considered the submission of Mr.Singh and we find substance in that. Relevant portion of the judgment of the Tribunal reducing the personal penalty has been quoted in the 4 preceding paragraph of this order. It does not indicate any reason much less valid reason. It is well settled that whenever a Court or Tribunal is given discretion, the discretion has to be exercised on sound principles, which must appear from the order itself. In the impugned order, no reason at all has been assigned. This, in our opinion, vitiates the order reducing the penalty. Accordingly, the answer to the substantial question of law formulated is in the negative and it is held that the Tribunal erred in reducing the personal penalty without assigning any reason. The matter will now go back to the Tribunal, who shall consider the matter afresh bearing in mind the observations aforesaid. The reference is answered accordingly. Tax case stands disposed off. (Chandramauli Kr.Prasad, J.) (Dr. Ravi Ranjan, J.) Patna High Court, Dated, 15th of September,2008. NAFR/Narendra/