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Penalties imposed under Section 117 of the Customs Act for short-payment of Merchant Overtime (MOT) charges. Jurisdictional authority confirming demands and imposing penalties. Appeal challenging penalties on the grounds of administrative nature of demands and lack of quasi-judicial jurisdiction for penalties. The judgment revolves around penalties of Rs. 10,000/- each imposed on the appellants for short-payment of Merchant Overtime (MOT) charges under Section 117 of the Customs Act. The appellants availed supervisory and allied services of Central Excise officers in their factory under the EOU Scheme, making some payments towards these charges. The Department issued show cause notices to recover allegedly outstanding amounts, leading to demands confirmed by the jurisdictional Deputy Commissioner of Customs and Central Excise, who also imposed penalties in three separate orders. The key contention arises from the nature of the demands and penalties. The learned Commissioner (Appeals) categorized the demands as administrative rather than quasi-judicial, yet sustained the penalties in a quasi-judicial capacity. The appellants challenge this inconsistency, arguing that if demands for establishment/supervision charges are administrative, then penalties should be treated similarly. The judgment highlights the dichotomy in the decision-making process, indicating a lack of clarity in the jurisdictional authority's actions. The judgment emphasizes the principle that penalties should align with the nature of the demands they stem from. If demands are deemed administrative, imposing penalties in a quasi-judicial capacity may lack legal basis. The analysis underscores the importance of maintaining consistency in the application of penalties based on the nature of the underlying charges. The appellants' argument for a strong prima facie case is acknowledged, leading to the waiver of pre-deposit and stay of recovery, with the appeals scheduled for a future date.
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