2017 (6) TMI 1281 - AT - Customs

Benefit of reduced penalty - settlement of the case - whether the benefit of reduced penalty of 15% under the amended Section 28(5) of Customs Act, 1962 read with Explanation 3 appended thereto should be available to the appellants for settlement of their case under Section 28(6) of the Act? - Held that - The provisions of Section 28(5) of the Customs Act, 1962 was amended vide Finance Act, 2015 and received the assent of the President of India on 14-5-2015. Explanation 3 appended to the amended provisions of Section 28(5) has extended the benefit of reduced amount of penalty of 15% to those cases, which were pending for closure with the adjudicating authority. In these cases, though the show cause notice was issued on 8-10-2014, but the same was adjudicated vide order dated 30-10-2015. Since such order was passed after the amendment of Section 28(5) ibid, the benefit of reduced penalty of 15% should be available to the appellant - the impugned order to the extent, it confirmed the penalty of 25% on the appellants are set aside and the appeals are allowed in favour of the appellants with the benefit of payment of reduced amount of penalty of 15% on the amount of non-payment of duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the benefit of reduced penalty under the amended Section 28(5) of Customs Act, 1962 should be available to the appellants for settlement of their case under Section 28(6) of the Act.

Analysis:
The issue involved in these appeals pertains to the availability of the benefit of reduced penalty under the amended Section 28(5) of the Customs Act, 1962 to the appellants for settling their case under Section 28(6) of the Act. The appellants were issued a show cause notice by the Officers of DRI for undervaluation and mis-declaration of goods imported by them. The appellants did not contest the allegations and deposited the proposed duty demand along with interest and 25% of penalty, seeking closure of their case under Section 28(6) of the Act. Subsequently, the provisions of Section 28(5) were amended, reducing the penalty to 15% instead of the earlier 25%. The appellants requested the adjudicating authority to consider the reduced penalty amount, but the original authority did not grant this benefit in the impugned order.

Upon considering the amended provisions of Section 28(5) of the Customs Act, 1962, it was noted that the benefit of reduced penalty of 15% was extended to cases pending for closure with the adjudicating authority. The explanation appended to the amended provisions clarified that cases where a show cause notice had been issued but an order determining duty had not been passed before the amendment would be deemed concluded if full payment was made within thirty days of the amendment. In this case, although the show cause notice was issued before the amendment, the order was passed after the amendment, making the appellants eligible for the reduced penalty.

Consequently, the Tribunal set aside the impugned order confirming the penalty of 25% on the appellants and allowed the appeals in favor of the appellants, granting them the benefit of paying a reduced penalty of 15% on the non-payment of duty amount. The appeals were thus allowed in favor of the appellants, providing them relief in accordance with the amended provisions of the Customs Act, 1962.