2017 (9) TMI 1662 - AT - Customs

Levy of Customs duty on impermissible wastage limit - Held that - Law requires that customs duty forgone in respect of impermissible wastage shall be realizable. Accordingly learned authority is correct to realize such duty on the impermissible quantum of wastage occurred. Penalty u/s 112(b) of Customs Act, 1962 - Held that - The authority has not found presence of any of the ingredients of penal provision for such levy. Therefore there shall be no penalty under Section 112(b) of Customs Act, 1962. Penalty u/s 117 of CA - Held that - There appears no prohibition of law to import the goods at the time of import. But there was wastage of imported goods beyond the SION norm. Therefore it cannot be construed that there was breach of the norm at the time of import - penalty set aside. Appeal allowed in part.

Summary

Issues involved:
1. Dispute over wastage limit norms prescribed by SION for ophthalmic glass used in manufacture.
2. Realization of customs duty forgone in case of impermissible wastage.
3. Penalty imposed under Section 112(b) of Customs Act, 1962.
4. Penalty under Section 117 in relation to import of goods and wastage beyond prescribed norm.

Analysis:

1. The appellant did not dispute the wastage limit norms prescribed by SION for ophthalmic glass used in manufacture, which stood at 9%. The appellant's wastage exceeded this norm, and it was acknowledged that accommodating wastage beyond the prescribed norm during manufacture was impermissible.

2. The law mandates the realization of customs duty forgone due to impermissible wastage. The learned authority was correct in enforcing the duty on the impermissible quantity of wastage. If the duty had already been paid in full, no further recovery was necessary. Any duty already realized would be offset against the ultimate liability.

3. Regarding the penalty imposed under Section 112(b) of the Customs Act, 1962, it was noted that the authority did not find the presence of any elements warranting the imposition of such a penalty. Consequently, no penalty was deemed applicable under Section 112(b).

4. In the context of the penalty under Section 117, it was observed that there was no legal prohibition on importing goods at the time of import. Although there was wastage beyond the SION norm, it was clarified that this did not constitute a breach of the norm during importation. Therefore, no penalty under Section 117 was deemed enforceable.

In conclusion, both appeals were allowed partially based on the above considerations, as outlined in the judgment delivered by the tribunal.