2016 (9) TMI 521 - AT - Customs

Imposition of penalty - Section114A of the Customs Act, 1962 - penalty imposable equal to duty short paid or dutynot paid is ₹ 68,22,953/- - penalty imposed ₹ 25,00,000/- - 100% EOU - imported raw material and capital goods - exemption Notification No. 13/81-Cus. Dt. 09.02.1981 - Held that - under Section 114A the penalty should be mandatorily equal to the duty short paid or non-paid. On this issue the Hon ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills 2009 (5) TMI 15 - SUPREME COURT OF INDIA and Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT , held that the mandatory penalty provided under Section 11AC which is pari materia to Section 114A cannot be reduced from equal amount of duty short paid or non-paid - reduced penalty wrongly imposed - the appellant liable to pay the penalty under Section 114A equal to the duty confirmed in the adjudication order - reduced penalty not justified. Demand of interest - Section 28AB of the Customs Act, 1962 - interest demand not confirmed - Held that - it appears that there is an apparent error on the part of the adjudicating authority that despite clearly holding that the interest is recoverable on duty payable under the provisions of Section 28AB of Customs Act 1962 in Para 15 of the impugned order, it was left from mentioning in the operating portion of the order - demand of interest upheld. Appeal allowed - decided in favor of Revenue.

Issues: Appeal against Order-in-Original regarding demand on 100% EOU for imported goods under exemption Notification No. 13/81-Cus, penalty imposition under Section 114A of Customs Act, interest demand under Section 28AB.

Analysis:
1. Demand on 100% EOU: The appeal was filed by the Revenue challenging the Order-in-Original confirming the demand on 100% Export Oriented Unit (EOU) for the period August 1993 to July 1997 concerning imported raw material and capital goods. The goods were cleared under exemption Notification No. 13/81-Cus, but as they were not put to use and export obligations were not fulfilled, duty was confirmed. However, the penalty imposed by the adjudicating authority was &8377; 25,00,000/-, which was less than the duty amount of &8377; 68,22,953/-. The Tribunal held that the penalty under Section 114A should be equal to the duty confirmed, citing relevant Supreme Court decisions. The appellant was directed to pay the penalty equal to the duty amount.

2. Penalty Imposition under Section 114A: Section 114A of the Customs Act mandates that the penalty for short-levy or non-levy of duty should be equal to the duty determined. In this case, the duty confirmed was &8377; 68,22,953/-, but the adjudicating authority imposed a penalty of &8377; 25,00,000/-, contrary to the statutory provision. The Tribunal, relying on Supreme Court judgments, emphasized that the penalty cannot be reduced from the duty amount. Therefore, the appellant was held liable to pay the penalty equal to the duty confirmed, as per Section 114A of the Act.

3. Interest Demand under Section 28AB: Despite the adjudicating authority acknowledging in Para 15 of the order that interest under Section 28AB of the Customs Act was payable on the duty amount, the interest demand was not confirmed in the operative part of the order. The Tribunal noted this apparent error and directed the appellant to pay interest under Section 28AB on the confirmed duty amount of &8377; 68,22,953/-. The order was modified to include the interest payment, in line with the legal provisions. Consequently, the Revenue's appeal was allowed, and the impugned order was modified accordingly.

In conclusion, the Tribunal upheld the demand on the 100% EOU for imported goods, directed the appellant to pay the penalty equal to the duty confirmed under Section 114A, and ordered the payment of interest under Section 28AB on the duty amount. The decision was based on statutory provisions and relevant judicial precedents, ensuring compliance with the legal framework governing customs duties and penalties.

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