IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.E.A. No.98 of 2008 Date of decision: 11.10.2010 Commissioner of Central Excise. -----Appellant. Vs. M/s Magnum Components (P) Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Kamal Sehgal, Sr. Standing Counsel for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (for short, “the Act”) against the order dated 16.1.2008 of the Customs, Central Excise & Services Tax Appellate Tribunal, New Delhi proposing to raise following substantial questions of law:- “Whether the Hon’ble Tribunal is justified in reducing the penalty imposed by the Adjudicating Authority under Section 11 AC of Central Excise Act, 1944 from 100% of duty to 25% of duty?” 2. In pursuance of Show Cause Notice, alleging clandestine removal of goods, order dated 31.10.2005 was passed, raising demand of duty and also imposing penalty, which C.E.A. No.98 of 2008 was affirmed on appeal but on further appeal to the Tribunal, even after recording a finding that there was suppression of intention to evade payment of duty under Section 11AC of the Act, penalty was reduced to Rs.25% on the ground that levy of penalty was discretionary. 3. We have heard learned counsel for the appellant. 4. Learned counsel for the appellant submits that there is patent error in the impugned order giving rise to substantial question of law in view of judgment of the Hon’ble Supreme Court in Union of India v. Dharamendra Textile Processors 2008 (231) ELT 3 which has been reiterated in Union of India v. Rajasthan Spinning and Weaving Mills (2009) 13 SCC 448, holding that if there is mens rea, levy of penalty under Section 11AC of the Act is mandatory. 5. Inspite of service, none appears for the respondent. 6. In view of judgments of the Hon’ble Supreme Court relied upon on behalf of the appellant, we allow the appeal and answer the question in favour of the appellant. 7. The matter is remanded to the Tribunal for passing a fresh order in accordance with law. (ADARSH KUMAR GOEL) JUDGE October 11, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 2