2004 (2) TMI 411 - AT - Customs

Summary

Issues:
1. Imposition of penalty on the appellants for duty evasion in the case of clandestine removal.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi was directed against the order of the Commissioner (Appeals) where the appeal of the appellants against the penalty imposition was rejected. The appellants were found liable to pay duty for 15.15 MTs of S.S ingots, which were short in physical stocks compared to the recorded balance. The duty was paid by the appellants, and a show cause notice was issued seeking confirmation of the duty and proposing a penalty. The duty was confirmed during adjudication, and a penalty of Rs. 50,000 was imposed under Rule 173Q, despite the show cause notice proposing a penalty under Section 11AC as well.

The appellants argued that the show cause notice should have been issued by the Deputy Commissioner instead of the Superintendent due to the involvement of suppression and evasion in clandestine removal. However, the Tribunal rejected this plea, stating that the case did not involve short-levy or non-levy but rather clandestine removal, making the notice issued by the Superintendent valid. Another challenge raised was regarding the imposition of penalty under Rule 173Q instead of Section 11AC. The Tribunal clarified that Section 11AC pertains to short-levy or non-levy, whereas the case in question dealt with clandestine removal, justifying the penalty under Rule 173Q.

Furthermore, the appellants contended that since the duty was paid before the show cause notice, no penalty could be imposed. The Tribunal disagreed, citing that Rule 173Q does not require mens rea for penalty imposition, referencing a judgment by the Hon'ble Bombay High Court. After considering the arguments and facts presented, the Tribunal upheld the penalty imposition but deemed the amount excessive given the evaded duty. Consequently, the penalty was reduced from Rs. 50,000 to Rs. 20,000, with the rest of the order confirmed. The appeal was partly allowed based on this modification.