2007 (9) TMI 160 - AT - Customs

Penalty equal to duty imposed on MD of company Sec. 114A provides that penalty can be imposed on only that person who is liable to pay duty or interest Even if MD is personally responsible for misdeeds of company, penalty on MD is not justified.

Summary

Issues:
1. Waiver of predeposit and stay of recovery in a penalty case under Section 114A of the Customs Act.
2. Imposition of penalty on a Managing Director under Section 114A when duty was demanded from the company.

Analysis:
1. The Appellate Tribunal, after examining the records and hearing both sides, decided that the appeal needed to be finally disposed of at that stage. The Tribunal dispensed with the predeposit and proceeded to take up the appeal for consideration. The appellant had sought waiver of predeposit and stay of recovery concerning a penalty imposed under Section 114A of the Customs Act.

2. The impugned order by the learned Commissioner of Customs demanded duty from a public limited company under Section 28(2) of the Customs Act but did not impose any penalty on the company under Section 114A. However, a penalty equal to the duty was imposed on the Managing Director of the company, who was the appellant in the case. The Tribunal noted that Section 114A provides for a penalty on the person liable to pay duty or interest as determined under Section 28(2) of the Act. The legal position, as recognized by the Tribunal in previous cases, clarified that penal liability under Section 114A is only on the person liable to pay duty. Even if the Managing Director was found responsible for the company's actions, it would not affect the penal liability under Section 114A, as no duty was demanded from him under Section 28(2) of the Customs Act.

3. Consequently, the penalty imposed on the appellant, the Managing Director, was vacated, and the appeal was allowed by the Tribunal. The decision was dictated and pronounced in open court, bringing the matter to a close.