2020 (2) TMI 702 - HC - Customs

Reduction in quantum of penalty - non-speaking order - principles of natural justice - HELD THAT - From the perusal of the order passed by the Commissioner it does appear that there were various other parameters which should have been taken into consideration while fixing the amount of penalty. Since there is an absence of considerations of all the parameters the question of law as reframed will have to be answered in favour of the Appellant. The impugned order to the extent it reduces the penalty from Rupees Ten Crores to Rupees One Lakh is quashed and set aside - appeal allowed.

Summary

Issues:
Reduction of penalty by Tribunal based on non-speaking order

Analysis:
The Appeals arose from a common order by the Customs, Excise Service Tax Appellate Tribunal, Mumbai, reducing the penalty on the Respondents-Directors of a Company from Rupees Ten Crores to Rupees One Lakh. The High Court admitted the Appeals observing that the impugned order lacked reasoning and required reconsideration. The primary issue was whether the Tribunal's order, which reduced the penalty, needed to be set aside due to being a non-speaking order.

The case involved Parasrampuria Industries Limited, which failed to submit the Export Obligation Discharge Certificate, leading to a penalty of Rupees Ten Crores imposed by the Commissioner. The Tribunal found the Respondents liable for penalty under Section 112A of the Customs Act but reduced the penalty drastically to Rupees One Lakh. The Appellant argued that the Tribunal's order was nonspeaking and perverse, while the Respondents defended the order based on background facts and abatement of Appeals against the Company and one Director.

The High Court emphasized that while the Tribunal had discretion to determine the penalty amount, such exercise could not be arbitrary. The Tribunal was obligated to provide detailed reasoning if reducing a substantial penalty. The absence of consideration for all relevant parameters in the Tribunal's order led the Court to conclude in favor of the Appellant. Consequently, the High Court allowed the Appeals, quashed the order reducing the penalty, and restored the matter to the Tribunal solely for the fixation of the penalty amount.

In its final decision, the High Court clarified that it did not comment on the merits of the case but highlighted the lack of reasoning in the Tribunal's decision. The Court emphasized that the Tribunal should determine the penalty amount based on proper reasoning and considerations. The Appeals were disposed of, leaving all contentions open for further consideration by the Tribunal.