2015 (10) TMI 2347 - AT - Central Excise

Benefit of reduced penalty - whether the Commissioner after holding the respondents guilty of committing violations of exemption notifications could have imposed penalty lesser than that provided in 114A of the Customs Act and 11AC of the Central Excise Act - Held that - period in dispute in this case pertains to November 1990 to February 1996. It is also not in dispute that the provisions of 114A of the Customs Act, 1962 and 11AC of the Excise Act, 1944 came into force with effect from 20/09/1996. Further both these provisions have not been specifically made applicable retrospectively. The judgements cited by the learned AR in the case of Pothys Cotton Products (P) Ltd. (2014 (12) TMI 690 - MADRAS HIGH COURT) and KRM International Ltd. (2014 (8) TMI 11 - MADRAS HIGH COURT) are not applicable in the facts and circumstances of the case as the period involved in this case is from November 1990 to February 1996, when the provisions of Sections 114A and 11AC of the Customs Act were not in force. Both the penalty provisions are applicable prospectively and not retrospectively as held by the Tribunal in the case of Lakshi Packaging (P) Ltd. (1997 (4) TMI 216 - CEGAT, MADRAS). - there is no merit in the Revenue s appeal - Decided against Revenue.

Summary

Issues:
Violation of conditions in exemption notifications, imposition of penalties under Section 114A of the Customs Act, 1962 and Rule 173Q of Central Excise Rules, 1944, retrospective application of penalty provisions.

Analysis:

Violation of Conditions in Exemption Notifications:
The case involved an appeal against an order passed by the Commissioner holding the appellant guilty of not fulfilling export obligations as per specified conditions in exemption notifications. The appellant failed to meet export obligations despite importing duty-free goods. The Commissioner imposed penalties and duties based on the non-compliance.

Imposition of Penalties under Section 114A and Rule 173Q:
The Commissioner did not impose equal penalties under Section 114A of the Customs Act, 1962 and Rule 173Q of Central Excise Rules, 1944, as required by law. The appellant argued that penalties should be equal to the duty determined, citing precedents where courts mandated equal penalties in such cases. However, the appellant failed to appear for a personal hearing, and their financial difficulties were considered by the Commissioner.

Retrospective Application of Penalty Provisions:
The key issue was whether penalties under Section 114A and 11AC of the Customs Act, 1962 and Central Excise Act, 1944 could be applied retrospectively. The Tribunal noted that the period in question was before the provisions came into force. Citing relevant case law, it was established that penalty provisions are applicable prospectively and not retrospectively. The Tribunal dismissed the Revenue's appeal, emphasizing that penalties cannot be imposed for a period when the relevant provisions were not in effect.

In conclusion, the Tribunal upheld the Commissioner's decision, ruling that penalties could not be imposed retrospectively and that the Revenue's appeal lacked merit. The case highlighted the importance of considering the timeline of events in determining the applicability of penalty provisions and ensuring compliance with exemption notification conditions.