2007 (6) TMI 129 - AT - Customs

Penalty (Customs) Penalty imposed u/s 114(iii) on the appellant on the ground that they export the impugned goods without claiming any export benefit but appellant contended that they filed the free shipping bills, and said section applied were filed shipping bill under drawback claim Hence penalty set aside

Summary

Issues:
Penalty under Section 114(iii) of the Customs Act, 1962 for goods under claim for drawback.

Analysis:
The case involved two appellants penalized under Section 114(iii) of the Customs Act, 1962. The appellants, a company, and its Chief Executive Officer were penalized Rs. 10.00 lakhs and Rs. 30.00 lakhs respectively. The appellate tribunal, after hearing both sides, found that the appellants had a prima facie case in their favor. Consequently, the tribunal waived the requirement of predeposit and proceeded to decide the appeals.

The tribunal examined Section 114(iii) of the Customs Act, 1962, as it existed prior to its substitution in 2003. The section pertained to penalties for goods under claim for drawback. The provision stated that in the case of goods under claim for drawback, a penalty not exceeding the amount of drawback claimed or Rs. 5,000, whichever is greater, could be imposed. However, in this case, the appellants had not claimed any drawback under the relevant sections of the Customs Act, and the shipping bills were not filed under claim for drawback. Therefore, the tribunal concluded that Section 114(iii) did not apply to the present case.

Based on the finding that the penalty was imposed under a provision that was not applicable to goods exported under free shipping bills, the tribunal set aside the impugned order imposing penalties on the two appellants. The tribunal held that since the appellants had not claimed any drawback and the shipping bills were not filed under claim for drawback, the penalty under Section 114(iii) was not justified. As a result, the tribunal allowed the appeals of the two appellants, setting aside the penalties imposed on them.

In conclusion, the tribunal's decision was based on the interpretation of Section 114(iii) of the Customs Act, 1962, and the specific circumstances of the case where no drawback was claimed for the exported goods. The tribunal's analysis focused on the applicability of the penalty provision and the absence of any claim for drawback by the appellants, leading to the setting aside of the penalties imposed on them.