2012 (5) TMI 541 - AT - Central Excise

Penalty - Non export of goods - Malafide intention of assessee - Held that - Duty stands confirmed as not contested. Penalty of identical amount also stands confirmed. We further note that there is admittedly violation of the provision of the policy in as much as the appellants have not exported 1045 pairs of shoes. As such they are liable to penalty. In view of the law declared by the Hon ble Supreme Court in the case of Dharmendra Textiles 2008 (9) TMI 52 - SUPREME COURT we uphold the imposition of penalty to the extent of 100%. Further penalty of identical amount also stands confirmed. However the appellants are given an option to pay 25% of the same within a period of 30 days from receipt of the present order in terms of proviso to Section 114A of the Customs Act 1962 in which case the penalty shall stand reduced to 25% - Decided partly in favour of assessee.

Summary

Issues:
Confirmation of demand and duty for non-export of shoes, imposition of penalty under Section 114A of the Customs Act, violation of policy leading to penalty.

Confirmation of Demand and Duty for Non-Export of Shoes:
The appellants admitted the non-export of 1045 pairs of shoes out of the total imported soles, leading to the confirmation of demand and duty amounting to Rs.57,429. The appellant's argument centered around seeking extensions for export, eventually requesting destruction of the unsold pairs due to their uselessness. The Revenue, however, emphasized the penal action due to the breach of the bond executed at the time of import. The Tribunal upheld the confirmation of duty and penalty, citing the precedent set by the Supreme Court in Dharmendra Textiles case, which allows for a 100% penalty under Section 114A for such violations.

Imposition of Penalty under Section 114A of the Customs Act:
The Tribunal acknowledged the violation of export policy by the appellants, leading to the imposition of a 100% penalty as per the provisions of Section 114A of the Customs Act. Despite the genuine nature of the non-export claim, the penalty was upheld in line with the legal precedent set by the Supreme Court. However, the appellants were granted the option to pay 25% of the penalty within 30 days from the receipt of the order, as allowed by the proviso to Section 114A, resulting in a reduction of the penalty to 25%.

Violation of Policy Leading to Penalty:
The Tribunal highlighted the clear violation of the export policy by the appellants due to the non-export of the specified number of shoes. This breach of policy warranted the imposition of penalty, which was further justified by the legal principles established in the Dharmendra Textiles case. The penalty amount was confirmed, but the appellants were provided with the opportunity to reduce it to 25% by making the specified payment within the stipulated timeframe. Ultimately, the appeal was rejected except for the option to reduce the penalty amount.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI underscores the confirmation of duty and penalty for non-export of shoes, the application of Section 114A of the Customs Act for penalty imposition, and the violation of policy leading to the upheld penalty with a provision for reduction upon partial payment.