2018 (6) TMI 818 - AT - Customs

Quantum of penalty u/s 114 of CA - The original authority had imposed penalty of ₹ 8,500/- under section 114 of the Customs Act, 1962 which was enhanced to ₹ 3,74,786/- by Commissioner (Appeals) - export of 24 cartons of goods of goat finished upper leather - it was reported that the samples do not satisfy the norms as there was absence of protective coating - Held that - Only in a few items the defect of not having protective coating was detected. The appellant has sought return of the goods for reprocessing the same for the purpose of exporting. It is explained by the appellant that the defect occurred due to mistake at the end of the job worker. The appellant ought to have ensured that the goods fulfilled the conditions as per the Public Notice. The appellant cannot shift the blame on the job worker. Taking note of the entire facts, the imposition of penalty of ₹ 3,74,786/- is on the higher side - penalty reduced to ₹ 8,500/- - appeal allowed in part.

Summary

Issues:
Export of unfinished leather, imposition of penalty, mis-declaration of goods, enhancement of penalty by Commissioner (Appeals).

Analysis:
The case involved a dispute regarding the export of goat finished leather. The appellant exported 24 cartons of goods labeled as "goat finished upper leather," but upon examination, it was found that six packages did not meet the norms of finished leather due to the absence of a protective coating. The adjudicating authority imposed a 60% ad valorem duty, ordered confiscation of the goods, and imposed penalties. The appellant sought permission to withdraw the goods for reprocessing and export. The Commissioner (Appeals) enhanced the penalty to ?3,74,786, leading to the appeal before the Tribunal.

The appellant argued that there was no deliberate intent to export unfinished leather, attributing the mistake to the job worker. They emphasized that the goods mostly complied with the required conditions and requested leniency, stating financial difficulties. The respondent contended that the penalty was rightly enhanced due to mis-declaration of goods.

After considering both parties' arguments and examining the records, the Tribunal acknowledged the minor defect in some items lacking protective coating. While holding the appellant responsible for ensuring compliance, the Tribunal recognized the request for reprocessing and export as evidence of good faith. The Tribunal deemed the penalty enhancement excessive and reduced it to the original amount of ?8,500, considering the appellant's financial situation and the circumstances of the case.

In conclusion, the Tribunal partially allowed the appeal, modifying the impugned order to reduce the penalty to ?8,500. The decision highlighted the importance of compliance with export norms, acknowledged the appellant's efforts to rectify the mistake, and balanced enforcement with the appellant's financial constraints.