2017 (3) TMI 540 - AT - Customs

Redemption fine - Penalty - appellant claim that he has paid differential duty along with 25% amount of duty as penalty before issuance of the SCN, thus, the demand not sustainable - Held that - in the said case the SCN were issued for confiscation and redemption fine under section 125 of the Act whereas, in this case duty has been demanded against the appellant u/s 28 of the Act, further, as per Section 28(5) of the Act, if the assesee pays duty alognwith 25% duty as penalty, in that circumstances, the proceedings comes to an end, therefore, the proceedings against the appellant were not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty and redemption fine on the appellant for differential duty paid before issuance of the show cause notice.

Analysis:
The appellant imported a consignment declared as heavy melting scrap, which was later found to contain engines and old cylinders. Subsequently, differential duty was demanded, and penalties were imposed. The appellant challenged the penalties, arguing that paying the differential duty along with a 25% penalty before the show cause notice rendered the proceedings unsustainable.

The appellant's counsel contended that the penalties should be set aside due to the pre-notice payment. Conversely, the respondent's representative relied on a Supreme Court case to assert that the penalties imposed were valid under Section 125 of the Customs Act, 1962, and not under Section 28(1) covering duty-related issues.

After hearing both parties, the Member (Judicial) analyzed the case and distinguished it from the precedent cited by the respondent. The Member noted that in this instance, duty was demanded under Section 28 of the Act, and as per Section 28(5), paying the duty along with a 25% penalty would conclude the proceedings. Therefore, the penalties imposed on the appellant were deemed unwarranted.

Consequently, the Member concluded that the order imposing redemption fine and penalty was contrary to law and set it aside. The appeal was allowed based on the finding that the proceedings against the appellant were not justified, given the payment made before the issuance of the show cause notice.