2007 (11) TMI 130 - AT - Customs

The expression penalty not exceeding the value of the goods in clause (iii) of Section 114 gives discretion to the concerned authorities to fix the penalty which does not exceed value of the goods - It does not contemplate that in all cases the penalty equal to the value of the goods should be imposed - excess drawback involved was only Rs.8, 174 - so penalty equal to the value of the goods was not warranted in the absence of any finding of conscious and deliberate breach penalty reduced

Summary

Issues:
Challenge to penalty under Section 114 of the Customs Act, 1962 for misdeclaration of goods and excess drawback claimed.

Analysis:
1. The appellant challenged the penalty imposed under Section 114 of the Customs Act, 1962, for misdeclaration of goods during export. The appellant had declared only copper to claim a higher rate of drawback applicable to copper, while the goods were found to include items made of both copper and iron. The appellant admitted the mistake, attributing it to the dealing Assistant, and the export was allowed provisionally. The adjudicating authority imposed a penalty of Rs.95,730/- under Section 114(iii) of the Act.

2. The Appellate Commissioner upheld the penalty, noting that the appellant had misdeclared the weight of copper to claim a higher drawback. The misdeclaration was admitted, and the Appellate Commissioner found no reason to interfere with the lower authority's decision. It was emphasized that being a reputed exporter did not absolve the appellant from liability for misdeclaration.

3. The authorities below imposed a penalty of Rs.95,730/-, exceeding the excess drawback claimed of Rs.8,174. The discretion under Section 114(iii) allows penalties not exceeding the value of the goods. In this case, the penalty was deemed excessive as there was no finding of a deliberate breach, and the mistake by the dealing Assistant was not questioned. The penalty was reduced to Rs.20,000/-, considering the circumstances and the amount of excess drawback involved.

4. The penalty was modified to Rs.20,000/- from Rs.95,730/-, as it was deemed sufficient to meet the ends of justice and align with the purpose of the law, given the circumstances of the case. The reduction was justified based on the discrepancy between the excess drawback claimed and the actual penalty imposed, emphasizing the discretion in determining penalties under the Act.

In conclusion, the appeal was partly allowed, and the penalty under Section 114 of the Customs Act, 1962, was reduced from Rs.95,730/- to Rs.20,000/- to better align with the circumstances and the purpose of the law.