2018 (6) TMI 1306 - AT - Customs

Waiver of penalties - manufacture of tracks type combine harvester - interpretation of the terms of the notification - concessional rate of duty in terms of N/N. 21/2002-Cus dated 01/03/2002 - duty liability with interest was paid - Held that - The language of the notification is very much clear stating that these are to be used for manufacture of combine harvester but the same has not been used for manufacture of combine harvester but the appellant used them as spare parts - the appellant is not entitled for concessional rate of duty in terms of exemption N/N. 21/2002-Cus dated 01/03/2002, which was amended by N/N. 12/2012-Cus dated 17/03/2012.. Penalty - Held that - As the language of the notification is clear, which does not allow for benefit of exemption notification and the same has been admitted by the appellant. Therefore, the penalty on the main appellant, namely, Claas India Pvt. Ltd. is rightly imposed - As the entire amount of duty along with interest has been paid prior to issuance of the show-cause notice, therefore, the penalty is reduced to 25% of the duty confirmed. Penalty on Shri Saurabh Gupta, Manager of the appellant company - Held that - The manager is not going to gain anything by claiming of benefit of notification. In that circumstances, the penalty of Shri Saurabh Gupta is not imposable - penalty setaside. Appeal allowed in part.

Summary

Issues involved:
Appeal against penalties imposed for claiming concessional rate of duty under Notification No.21/2002-Cus; Interpretation of terms of exemption notification; Waiver of penalties; Imposition of penalty on the manager.

Analysis:

1. Appeal against Penalties:
The appellants contested the penalties imposed on them for claiming a concessional rate of duty under Notification No.21/2002-Cus, which was later amended. The main issue was whether the imported goods, tracks for combine harvesters, were actually used in the manufacture of combine harvesters as required by the notification. The appellant admitted the duty liability and paid it along with interest. The appeal sought waiver of penalties, arguing that the misunderstanding of the terms of the notification led to the non-compliance.

2. Interpretation of Exemption Notification:
The central issue revolved around the interpretation of the exemption notification. The appellant argued that their understanding was that no specific end-use declaration was required for the tracks imported. They claimed that even if some tracks were used as spare parts, they were ultimately used in the manufacture of combine harvesters. However, the opposing view contended that the tracks were not used for the intended purpose as per the notification, leading to the denial of the exemption.

3. Waiver of Penalties:
The appellant's counsel requested the waiver of penalties, emphasizing the absence of any malicious intent to benefit from the notification wrongly. They highlighted that a penalty imposed on the manager, who would not gain from the benefit, should also be waived. The opposing argument stressed the clear language of the notification, indicating that the tracks were to be used for manufacturing combine harvesters, which was not adhered to by the appellant.

4. Imposition of Penalty on Manager:
A penalty of ?10 lakhs was imposed on the manager of the appellant company. The appellant contended that the manager would not benefit from the notification claim, thus questioning the rationale behind penalizing the manager. The tribunal found that the penalty on the manager was unwarranted, leading to the setting aside of the penalty imposed on the manager.

In conclusion, the tribunal upheld the penalties on the main appellant but reduced it to 25% of the duty confirmed since the duty along with interest was paid before the show-cause notice. The penalty on the manager was set aside due to lack of personal gain. The appeals were disposed of based on these findings.