2016 (10) TMI 109 - AT - Customs

Quantification of penalty imposed under section 114A of the Customs Act, 1962 - capital goods imported duty free by 100% EOU - Whether the penalty is to be imposed equal to duty or the authority was justified in reducing such penalty? - Held that - the adjudicating authority had no power to reduce the penalty from the amount equal to the duty. The decision in the case of The Commissioner of Central Excise Versus M/s. Viraj Alloys Ltd. 2010 (10) TMI 1027 - BOMBAY HIGH COURT relied upon - appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Imposition of penalty under Section 114A of the Customs Act, 1962.
2. Authority's power to reduce penalty amount.
3. Applicability of judgments in determining penalty amount.
4. Consideration of extended period for duty demand.

Analysis:
1. The appeal was filed by the Revenue against an Order-in-Original confirming a demand of duty for capital goods imported duty-free by a 100% EOU for the period 1991-92 to 1995-96. A penalty of ?50 lakhs was imposed under Section 114A of the Customs Act, 1962. The Revenue challenged the reduced penalty amount, arguing that the penalty should be equal to the duty confirmed.

2. The learned Jt. Commissioner for the Revenue contended that under Section 114A, the penalty should be equal to the duty confirmed, citing judgments such as Commissioner of Customs (Exports), Chennai-I Vs. KRM International Ltd. and Commissioner of Central Excise Vs. Viraj Alloys Ltd. The Respondent did not appear despite notice.

3. The Tribunal noted that Section 114A mandates the penalty to be equal to the duty not paid, without any option to reduce it. Referring to the judgment in Union of India Vs. Dharmendra Textile Processors, it was established that when a mandatory penalty is provided under the Act, it cannot be reduced. Based on this, the Tribunal concluded that the reduced penalty of ?50 lakhs was not sustainable and enhanced it to ?11,02,06,881, equal to the duty confirmed.

4. Additionally, the Tribunal addressed an appeal related to the submission of additional documents, clarifying that it was not a fresh appeal but an error in allotting a new appeal number. Consequently, the appeal was dismissed as infructuous. The decision was pronounced in court on 26.08.2016.