2010 (8) TMI 298 - AT - Customs

Penalty Quantum of penalty - penalty prescribed for the contraventions is not exceeding the value of the goods or Rs. 5,000/- whichever is higher or not exceeding the duty sought to be evaded on such goods or Rs. 5,000/-, whichever is higher. Penalty imposable would be not exceeding Rs. 5,000/- if the value of the offending goods or the duty sought to be evaded does not exceed Rs. 5,000/- and if the value offending goods on the duty sought to be evaded is more than Rs. 5,000/-, the penalty imposable would be not exceeding value of the goods or the duty sought to be evaded - what is prescribed is the upper limit and not the minimum penalty - Section 112 of Customs Act.

Summary

Issues:
Illicit import of Nepali cigarettes, confiscation of cigarettes, penalty under Section 112 of Customs Act, review appeal for enhancement of penalty, dismissal of appeal by Commissioner (Appeals), appeal by Revenue against Commissioner (Appeals) order.

Analysis:
The case involved the illicit import of Nepali cigarettes valued at Rs. 4,500, leading to the confiscation of the cigarettes and the imposition of a penalty of Rs. 4,500 on the individual involved under Section 112 of the Customs Act. Subsequently, the Department sought a review appeal before the Commissioner (Appeals) to increase the penalty to Rs. 5,000 based on the minimum penalty prescribed under Section 112(a) of the Customs Act. However, the Commissioner (Appeals) dismissed the Department's appeal, prompting the Revenue to file an appeal against this decision.

Upon hearing the case, the Appellate Tribunal considered the Department's argument that the minimum penalty under Section 112 of the Customs Act for contraventions of clauses (a) or (b) is Rs. 5,000. The Tribunal examined the language of Section 112, which specifies that the penalty imposed should not exceed the value of the goods or Rs. 5,000, whichever is higher, or the duty sought to be evaded on such goods or Rs. 5,000, whichever is higher. It was clarified that the prescribed amounts are upper limits and not minimum penalties. This interpretation was supported by a previous decision of the Larger Bench of the Tribunal in a similar case involving Rule 25 of the Central Excise Rules, 2002. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it accordingly.

In conclusion, the Appellate Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal, emphasizing that the penalty prescribed under Section 112 of the Customs Act represents an upper limit rather than a minimum penalty, as clarified by the Tribunal's previous rulings in similar cases.