2011 (4) TMI 453 - AT - Customs

Penalty - Exemption under Notification No.21/2002-Cus dt.1.3.02 - As the appellant had sold the said oil in the open market proceedings were initiated against them which culminated into an order passed by the lower authorities confirming demand along with interest and imposing 100% penalty - the appellant they have deposited 25% of the penalty within 30 days from the date of passing of order by Additional Commissioner - Even otherwise also no such option was extended to them by lower authorities - Hon ble High Court of Gujarat in the case of M/s Exotic Associates Vs. CCE (2009 -TMI - 76674 - GUJARAT HIGH COURT) has held that such option can be extended even at appeal stage - reduce the penalty to 25%.

Summary

Issues:
Confirmation of duty and interest under Notification No.21/2002-Cus for selling Crude Palm Oil in the open market, imposition of penalty, reduction of penalty to 25%.

Confirmation of Duty and Interest:
The appellant sought exemption under Notification No.21/2002-Cus for importing Crude Palm Oil but sold it in the open market, leading to the confirmation of duty of Rs.13,49,993/- along with interest. The lower authorities confirmed the demand, imposed 100% penalty, and the appellant did not contest the duty and interest. The appellant argued that they had deposited the duty and interest even before the Show Cause Notice was issued, and 25% of the penalty within 30 days of the Order-in-Original. The Tribunal confirmed the duty and interest as uncontested and noted that the appellant had indeed deposited 25% of the penalty within the stipulated time frame. The Tribunal referred to precedents where the option to reduce penalty to 25% was extended even at the appeal stage.

Reduction of Penalty to 25%:
Considering that the appellant had deposited the entire dues along with 25% of the penalty, the Tribunal decided to reduce the penalty to 25%. The Tribunal highlighted that no such option was initially extended by the lower authorities but cited cases where such an option could be provided even during the appeal stage. Despite modifying the penalty amount, the Tribunal rejected the appeal on other grounds.

In conclusion, the Tribunal confirmed the duty and interest, reduced the penalty to 25% due to the appellant's timely deposits, and rejected the appeal except for the modification in the penalty amount. The judgment underscores the importance of timely compliance with penalty payments and the possibility of penalty reduction even during the appeal process based on legal precedents.