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Issues: Penalty imposition under Section 114A on non-importers
The judgment deals with the issue of penalty imposition under Section 114A of the Act on persons who are not importers and not liable to pay duty or interest. The key question is whether the penalty can be imposed on a party that is not the importer but is involved in the transfer of an advance license. Analysis: The appellants, M/s. Chowhan Exports Limited, had applied for and received an advance license, which was later transferred to M/s. Sunil Chemical Industries. The Commissioner held that goods manufactured by M/s. Sunil Industries were not entitled to benefits under Notification 203/92 due to availing Modvat credit in the manufacture of exported goods. Consequently, a penalty was imposed on M/s. Chowhan Exports Limited under Section 114A of the Act. The focus of the judgment is on the legality of imposing this penalty on a party that is not the importer. The Tribunal highlighted that Section 114A allows for the imposition of a penalty on a person liable to pay duty or interest under Section 28(3). It emphasized that the penalty is directly related to the duty or interest payable and cannot be imposed on a party not liable to pay duty. In this case, the penalty was incorrectly imposed on M/s. Chowhan Exports Limited, who was not the importer, and therefore not liable to pay duty. The Tribunal found that the penalty should have been imposed on the importer, not on a party involved in the license transfer. As a result, the appeal was allowed, and the penalty imposed on M/s. Chowhan Exports Limited was set aside. The Tribunal noted that in previous cases, they had consistently ruled against imposing penalties under Section 114A on parties who were not importers and not liable to pay duty or interest. Despite their clear interpretations, penalties continued to be imposed incorrectly. The Tribunal expressed disappointment that their orders were being disregarded, leading to unnecessary work for the department and a negative image due to harassment of parties not liable for penalties. In conclusion, the judgment emphasizes the correct application of penalties under Section 114A, highlighting that penalties should only be imposed on parties liable to pay duty or interest. It calls for adherence to legal provisions and administrative supervision to prevent the unjust imposition of penalties on parties not responsible for duty payments. The appeal was allowed, and the impugned order imposing the penalty was set aside.
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