2021 (10) TMI 998 - SC - Customs

Levy of penalty - belated reopening of the case - Violation of principles of natural justice - detailed discussion not made - Imposition of penalty - HELD THAT - There is lack of discussion and in-depth examination in light of the defence raised, inter alia, referring to worldwide operations and that the employees were working under supervision of the joint venture partner. Keeping in mind the statement made on affidavit that the appellant(s) has withdrawn from Indian market and have no active business operations in India anymore and that the appellant(s) have already deposited ₹ 38 crores covering the principal amount and possibly the part of statutory interest component, we are inclined to set aside the order imposing penalty on the appellant(s) in the peculiar facts of the present case. This order shall not be treated as precedent in any other case. These appeals partly succeed and the order of penalty is set aside.

Summary

Issues:
1. Challenge to Final Order Nos. 56537-56538/2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi.
2. Limited notice issued by the Court on the question of penalty.
3. Reopening of the entire case beyond the question of penalty.
4. Lack of discussion and examination regarding penalty imposition.
5. Withdrawal from the Indian market and deposit of &8377; 38 crores by the appellant(s).
6. Setting aside the penalty imposition.
7. Department's right to recover statutory interest component.

Analysis:
1. The Supreme Court heard appeals challenging the Final Order Nos. 56537-56538/2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The Court issued limited notice on the question of penalty after hearing the appellant(s) on 25-1-2018.
2. The appellant(s) requested to reopen the entire case, arguing beyond the penalty issue, but the Court declined, stating that the order for limited notice was accepted by the appellant(s) and cannot be challenged belatedly. The Court found no reason to re-examine the factual findings and deviations indicating a breach of statutory mandate.
3. The Court focused the discussion solely on the question of penalty. It noted a lack of detailed examination regarding penalty imposition, especially considering the appellant(s) referred to worldwide operations and employees working under a joint venture partner's supervision.
4. Considering the appellant(s) had withdrawn from the Indian market and deposited &8377; 38 crores covering the principal amount and part of the statutory interest component, the Court decided to set aside the penalty order in the specific circumstances of the case, clarifying that the decision should not be considered a precedent.
5. The Court allowed the Department to recover any deficit in the statutory interest component from the appellant(s) if necessary, despite the &8377; 38 crores deposit, with a specified compliance timeframe mentioned in the demand notice.
6. Pending applications were disposed of as part of the judgment, bringing the matter to a conclusion.