2017 (11) TMI 1046 - HC - Customs

Penalty - Whether on the facts and circumstances of the case, the Tribunal was justified in reducing the penalty imposed u/s 114(iii) of the CA, 1962 when the suppression by the appellant has been established during adjudication proceedings? - Held that - When the adjudicating authority is empowered to impose lesser penalty than the maximum provided it cannot be said that the Tribunal is not vested with the same power. The Tribunal having exercised the above discretion for the reasons recorded which do not appear to be arbitrary or whimsical, in any way, the said discretion is not liable to be interfered with and the Tribunal was justified in reducing the penalty imposed u/s 114(iii) of CA - appeal dismissed - decided against appellant.

Summary

Issues:
Reduction of penalty under Section 114(iii) of the Customs Act, 1962 by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

Analysis:
The appeal was filed against the CESTAT's order dated 9-4-2013, which upheld the redemption amount but reduced the penalty imposed on the parties to ?1 lakh each instead of ?29,82,729, equivalent to the value of the confiscated goods. The main legal question raised in the appeal was whether the Tribunal was justified in reducing the penalty under Section 114(iii) of the Customs Act, 1962, despite the established suppression by the appellant during adjudication proceedings.

The export consignment was confiscated due to containing goods different from those mentioned in the shipping bills. Apart from a redemption fine of ?1 lakh, a penalty of ?29,82,179 was imposed under Section 114(iii) of the Act. The Tribunal, in reducing the penalty, noted that the discrepancy was voluntarily disclosed by the parties to the Customs authorities, and they requested to call back the consignment upon detecting a bona fide mistake. The Tribunal found no ill design or wilful intention to suppress the mistake, concluding that it was not a case for imposing the maximum penalty.

Section 114(iii) of the Act allows for a penalty not exceeding the value of the goods. The phrase "not exceeding the value of the goods" indicates that the maximum penalty cannot surpass the value of the goods, and the authority has the discretion to impose a lesser penalty. The Court held that since the adjudicating authority can impose a lesser penalty, the Tribunal also possesses the same power. The Tribunal's exercise of discretion, deemed not arbitrary or whimsical, was considered justifiable in reducing the penalty. Therefore, the substantial question was answered in favor of the respondent.

Considering the facts and circumstances of the case, the Court found the appeal lacking merit and dismissed it accordingly.