2009 (5) TMI 797 - AT - Central Excise

Summary

Issues involved: Appeal against imposition of penalty for irregular credit of additional customs duty on imported goods.

Summary:

Issue 1: Imposition of penalty by Commissioner (Appeals)
The appellant's representative argued that the irregular credit of additional customs duty was due to a mistake made by an employee of the company, who mistakenly took credit of duty foregone on bills of entry covered by an advance licence/authorization. The mistake was promptly detected by the appellants themselves, and they rectified it by debiting the irregular credit and informing the department. The Original Adjudicating Authority did not impose any penalty, but on appeal, the Commissioner (Appeals) imposed a penalty. The Commissioner (Appeals) acknowledged that there was no intention to evade payment of duty, but justified the penalty under Rule 13 and Rule 15 without requiring "mens rea." The appellant contended that since the mistake was unintentional and promptly rectified, the penalty was unjustified.

Issue 2: Adjudication by the Tribunal
The Tribunal noted that the irregular credit was a result of a human mistake with no intention to evade duty. The appellants had paid the duty and interest promptly upon detecting the error, which was also self-reported to the department. Considering these circumstances, the Tribunal found that a lenient view was warranted. Consequently, the penalties imposed on the appellant were set aside, and the appeal was allowed.

This judgment highlights the importance of prompt rectification of errors, self-reporting, and the Tribunal's discretion to consider the circumstances in penalty imposition cases.