2010 (5) TMI 618 - CGOVT - Customs

Penalty - Applicant exported the goods and claimed drawback and declared that Cenvat has not been claimed by them or supporting manufacturers - Drawback was refunded along with interest as soon as the facts were brought to the applicant s knowledge - Held that - Applicant company had admitted in his statement that they knew about the availment Cenvat credit facility by the manufacturer-suppliers. As such this intention to avail drawback facility willfully stands established and therefore order for imposition of penalty under Section 114(iii) of Customs Act, 1962 cannot be assailed. However as the assessee co-operated the penalty is reduced.

Summary

Issues:
- Dispute regarding the imposition of personal penalty of Rs. 5 lakhs by Commissioner (Appeals).
- Contention of the applicant regarding the drawback claim based on supplier declarations and lack of intention to defraud revenue.
- Appeal against the penalty amount as being unreasonable, disproportionate, and excessive.

Analysis:
1. Dispute over Personal Penalty:
The applicant challenged the imposition of a personal penalty of Rs. 5 lakhs by the Commissioner (Appeals), arguing that the claim for drawback was made in good faith based on supplier declarations without any intention to defraud the revenue. However, during the investigation, it was revealed that the applicant was aware of the manufacturer-suppliers availing Cenvat credit, indicating a willful intention to avail the drawback facility. As a result, the imposition of the penalty under Section 114(iii) of the Customs Act, 1962 was upheld by the Government.

2. Contention Regarding Drawback Claim:
The applicant contended that the claim for drawback was legitimate, supported by supplier declarations, and that they promptly refunded the irregularly availed amount of Rs. 13,06,043/- along with interest during the investigation. The Government acknowledged the voluntary repayment but noted that the penalty imposed was excessive considering the circumstances. The Government reduced the personal penalty from Rs. 5 lakhs to Rs. 1.50 lakhs, recognizing the overall context of the case and the applicant's actions in rectifying the irregularity.

3. Appeal Against Penalty Amount:
The applicant further argued that the penalty of Rs. 5 lakhs was arbitrary, unreasonable, and disproportionate, emphasizing that the refund with interest was made before any show-cause notice was issued. The Government, while acknowledging the voluntary repayment and lack of fraudulent intent, found the penalty excessive and reduced it to Rs. 1.50 lakhs. The Government's decision to reduce the penalty was based on a holistic assessment of the case, balancing the irregularity with the applicant's cooperation and corrective actions.

In conclusion, the Government disposed of the revision application by modifying the impugned order-in-appeal to reduce the personal penalty imposed on the applicant to Rs. 1.50 lakhs. The decision was based on the applicant's voluntary repayment of the irregularly claimed drawback amount, coupled with the acknowledgment of the lack of fraudulent intent in the initial claim process.