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Issues: Application for waiver of pre-deposit of penalty under Section 112-A of the Customs Act, 1962; Legality of the impugned order; Principles of Doctrine of Res judicata and Issue Estoppel; Levy of penalty on the petitioner; Financial hardship as a ground for waiver of pre-deposit.
The judgment pertains to an application for waiver of pre-deposit of penalty amounting to Rs. 50.00 lakhs imposed on the petitioner under Section 112-A of the Customs Act, 1962. The proceedings were initiated against the petitioner for allegedly importing Steel Wire Rods duty-free under the DEEC scheme, subsequently selling them in the market without utilizing them for export, leading to the penalty imposition. The petitioner argued financial hardship as a basis for the waiver, citing a previous instance where a penalty was waived due to similar grounds. The Department did not present any counter-affidavit challenging the petitioner's financial situation, and the petitioner contended that the penalty was excessive given the circumstances. The petitioner also raised concerns regarding the legality of initiating fresh proceedings for a smaller quantity of goods illegally diverted after a previous penalty imposition for a larger quantity, invoking the principles of Doctrine of Res judicata and Issue Estoppel. The petitioner's counsel argued that the penalty imposition of Rs. 50.00 lakhs was not legally sustainable, especially considering the petitioner's role as a Director rather than the Managing Director at the time of import. The petitioner highlighted the lack of availability of the imported goods for confiscation as an insufficient ground for the substantial penalty. Additionally, the counsel pointed out the pendency of an earlier appeal and requested the Tribunal to expedite the hearing of both appeals together after granting the waiver of pre-deposit. The Department's representative contended that the second show cause notice, which led to the impugned order, was valid as it pertained to different Bills of Entry not covered in previous proceedings. The Department argued that the non-availability of goods for confiscation was a relevant factor in determining the penalty amount and relied on the Customs Act's provisions empowering the adjudicating authority to levy penalties based on the gravity of the offense. The Department also referenced a previous ruling to support the notion that financial hardship should not be a valid ground for waiver in cases of contravention of the law. Upon considering the submissions, the Tribunal acknowledged the petitioner's plea of financial hardship, noting the lack of evidence contrary to the petitioner's financial situation. The Tribunal found merit in the petitioner's argument regarding financial incapacity and undue hardship, granting the waiver of pre-deposit of penalty pending the appeal's disposal. The Tribunal directed the Registry to list the appeal for an early hearing along with connected appeals, emphasizing the importance of safeguarding the right of appeal in cases of substantiated financial hardship.
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