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Issues:
1. Dismissal of appeal for non-deposit of penalty amount under Section 116 of the Customs Act. 2. Opportunity given by the Appellate Collector before dismissing the appeal. 3. Obligation to deposit penalty under Section 116 for hearing the appeal. 4. Justification of penalty imposition by the Deputy Collector. 5. Entitlement to claim refund of penalty amount. Analysis: Issue 1: Dismissal of appeal for non-deposit of penalty amount under Section 116 The appeal was dismissed by the Appellate Collector for non-deposit of the penalty amount under Section 116 of the Customs Act. The appellants argued that the requirement to deposit the penalty before hearing the appeal was not applicable to penalties levied under Section 116. However, the Tribunal held that Section 129-E of the Customs Act mandates the deposit of penalty demanded, including those under Section 116, pending appeal. The Tribunal emphasized that the provisions of Section 129-E do not exempt the deposit of penalties under any specific section, and the argument that executing a bond under Section 42(1) negates the deposit obligation was deemed invalid. Issue 2: Opportunity given by the Appellate Collector before dismissing the appeal The Tribunal noted that the Appellate Collector did not provide an opportunity for the appellants to be heard before rejecting the appeal for non-deposit of the penalty. The rules of natural justice require that the appellant be given a chance to deposit the amount before the appeal is dismissed. The Tribunal highlighted that the Collector should have granted time for the deposit, and only if the appellants failed to comply, could the appeal be rejected. Issue 3: Obligation to deposit penalty under Section 116 for hearing the appeal The Tribunal clarified that the Appellate Collector had the discretion to dispense with the deposit of penalty or duty demanded if it would cause undue hardship to the appellants. However, this decision should be made after considering the interests of revenue. The Tribunal held that the Collector should have considered the proviso to Section 129-E and granted time for the deposit before rejecting the appeal. Issue 4: Justification of penalty imposition by the Deputy Collector The Deputy Collector had imposed a penalty for short-landing of two crates, but the appellants presented an amended short-landing certificate showing that only one crate was short-landed. The Tribunal found that the penalty imposed for the crate cleared on a later date was not justified. The matter was remanded to the Deputy Collector for further examination of the refund claim in light of the new evidence presented. Issue 5: Entitlement to claim refund of penalty amount The Tribunal allowed the appeal, set aside the Appellate Collector's order, and remanded the matter to the Deputy Collector for consideration of the refund claim in accordance with the observations made. The Tribunal highlighted the need for further examination by the competent authority to determine the admissibility of the refund claim.
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