2008 (8) TMI 693 - AT - Customs

Summary

Issues:
1. Recovery of duty foregone at the time of import
2. Imposition of penalty under Section 114A of the Customs Act, 1962

Issue 1: Recovery of Duty Foregone at the Time of Import

The judgment revolves around the recovery of duty foregone at the time of import of polyester filament yarn. The Commissioner of Customs ordered the recovery of customs duty and interest under Section 28AB due to the imported raw materials being diverted into the domestic market instead of being used for the manufacture of export goods by the respondents' EOU. The duty-free import benefit was deemed unavailable, leading to the imposition of a penalty of Rs. 1,00,000 in accordance with Section 114A of the Customs Act, 1962. The Revenue appealed against the penalty, citing the provisions of Section 114A, which stipulate that in cases of duty not paid, short levied, or interest not charged due to collusion or wilful misstatement, the penalty should equal the duty or interest determined.

Issue 2: Imposition of Penalty under Section 114A of the Customs Act, 1962

The judgment analyzes the imposition of a penalty under Section 114A of the Customs Act, 1962. The Tribunal found merit in the Revenue's submission, emphasizing the language of Section 114A. It was highlighted that once the Commissioner decided to impose a penalty as outlined in the show cause notice under this section, the penalty should be equivalent to the duty short paid or short levied, which in this case amounted to Rs. 7,20,823. This interpretation was supported by a previous decision of the Tribunal in Madras Petrochem Ltd. v. CC, Chennai, 2007 (218) E.L.T. 712. Consequently, the impugned order was set aside, and the appeal was allowed, leading to an enhancement of the penalty on the respondents to Rs. 7,20,823.

In conclusion, the judgment delves into the recovery of duty foregone at the time of import and the subsequent imposition of a penalty under Section 114A of the Customs Act, 1962. The decision underscores the strict application of penalties in cases of duty evasion or misstatement, aligning with the statutory provisions and judicial precedents.