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Issues: Penalty imposed under Section 114(A) of the Customs Act, 1962; Imposition of penalty under Section 112(a) and (b) of the Customs Act, 1962.
Analysis: 1. The case involved the appellants, owners of an ocean-going vessel, who required imports for maintenance purposes, including special paint and surface coating material. The goods were to be supplied on board the vessel at Kandla, with the supplier importing the goods at Chennai and arranging for transshipment to Kandla under Customs seal. 2. Upon arrival at Kandla, instead of allowing the goods on board, they were seized, leading to a Show Cause Notice and subsequent penalties imposed by the Commissioner of Customs. A penalty of Rs. 6,79,360/- was imposed under Section 114(A) of the Customs Act on the appellants, with a further penalty of Rs. 5,00,000/- imposed on the Managing Director of the company, along with confiscation of the goods under Sections 111(m) and 111(n) of the Customs Act. 3. The main issue for consideration was whether the penalty imposed under Section 114(A) of the Customs Act was justified. Section 114(A) specifies that penalties are applicable when duty has been short levied, not levied, or erroneously refunded due to collusion or wilful misstatement, but not when the title of goods has been relinquished. The Tribunal found the penalty on the appellants' company to be illegal and set it aside, ordering a refund of the deposited amount. 4. However, the penalty imposed on the Managing Director under Section 112(a) and (b) of the Customs Act was upheld by the Tribunal. Section 112 deals with penalties for improper importation of goods, and in this case, the penalty on the Managing Director was deemed appropriate. 5. In conclusion, the Tribunal allowed the company's appeal, setting aside the penalty imposed under Section 114(A) and ordering a refund. The appeal filed by the Managing Director was dismissed, upholding the penalty imposed on him under Section 112(a) and (b) of the Customs Act.
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