2014 (6) TMI 380 - AT - Customs

Penalty u/s 114A and 114(iii) - Duty drawback claim - Held that - On perusal of the show-cause notice, allegation against the appellants is that they have wrongly availed draw back claim. If an assessee is taken draw back claim wrongly, in that situation, it cannot be said that the assessee was having an intention to suppress the facts. Therefore, the facts of suppression are not proved as the show-cause notice itself alleges that draw back has been taken wrongly. as per the Section 114A of the Customs Act, 1962, penalty can be imposed on account of non-payment, short payment or erroneously refunded duty but in this case duty is not demanded. The only allegation against the appellants is that they have availed draw back claim wrongly. in the show-cause notice there is no proposal for confiscation of the impugned goods. Therefore, penalty under Section 114(iii) is not imposable - Decided in favour of assessee.

Summary

Issues:
Penalties under Section 114A and 114(iii) of the Customs Act, 1962 imposed on the main appellant and the Director of the Company for wrongly availing duty draw back on export goods procured without payment of duty.

Analysis:

1. Penalty under Section 114A:
The main issue in this case revolves around the imposition of penalties under Section 114A of the Customs Act, 1962. The appellants, who are manufacturers of De-Oiled Cake and exporters, were alleged to have wrongly claimed duty draw back on export goods for which they had not paid duty on the Hexane gas procured. The learned Counsel for the appellants argued that since the duty draw back claim along with interest was paid before the show-cause notice, the penalty should not be imposed as there was no intention to take double benefit. It was contended that as per the decision in Chowhan Exports Ltd. vs. CC, penalty under Section 114A is not imposable without a demand for duty. The Tribunal agreed with this argument, stating that the only allegation was the wrongful availment of draw back, not non-payment or short payment of duty. Therefore, the penalty under Section 114A was deemed not imposable on the main appellant.

2. Penalty under Section 114(iii):
The second issue pertains to the penalty imposed under Section 114(iii) of the Customs Act, 1962 on the Director of the Company. The contention raised was that since there was no proposal for the confiscation of the impugned goods in the show-cause notice, the penalty under this section should not be imposed. The Tribunal concurred with this argument, emphasizing that Section 114 allows for penalties only if the goods are liable for confiscation. As there was no such proposal in the notice, the penalty under Section 114(iii) was deemed not imposable on the Director of the Company.

3. Conclusion:
After considering the submissions from both sides, the Tribunal held that the penalties imposed on both the main appellant and the Director were not imposable. The impugned order was modified to set aside the penalties on both appellants, allowing the appeals in their favor. The judgment highlights the importance of specific allegations and proposals in show-cause notices for the imposition of penalties under relevant sections of the Customs Act, ensuring a fair and justified decision-making process.