2020 (4) TMI 279 - AT - Customs

Imposition of penalty - appellants have paid of all the duty along with interest and 25% of the penalty with an impression that 25%of the penalty works out to ₹ 2,03,592/- whereas the actual amount of penalty works out to ₹ 2,53,313/- - HELD THAT - The appellant was under the impression that 25% of the penalty works out to ₹ 2,03,952/- and it was paid by them before investigation itself therefore while issuing the show-cause notice, the authorities are required to calculate the actual amount of penalty payable by the appellant towards penalty and if there is any short payment they would have been be asked to pay at that stage and the matter could have been come to an end. But instead of doing so, the matter had to travel up to this Tribunal which is very unfortunate - As whole of the demand of duty, interest and 25% penalty has been paid by the appellant and the Managing Director is also not be penalised. The penalty equal to 100% duty imposed by the learned Commissioner is not sustainable against the appellant - Appeal allowed.

Summary

Issues: Contesting penalties imposed on appellant for alleged non-compliance with Section 28 of the Customs Act 1962.

Analysis:
1. The appellants contested penalties imposed on them, arguing that they had paid all duty, interest, and 25% of the penalty before the show-cause notice was issued. However, the authorities calculated the penalty amount to be higher than what was paid, leading to a demand for additional penalty. The Commissioner (Appeals) upheld this decision, requiring the appellants to pay 100% of the duty demand and penalizing the Managing Director as well.

2. The Tribunal found that the appellant's payment of duty, interest, and 25% penalty before the show-cause notice was issued should have been appropriately appropriated. The Tribunal noted that the appellant's understanding was that 25% of the penalty amounted to a specific sum, which they paid in advance. The Tribunal criticized the authorities for not clarifying the actual penalty amount earlier in the process, leading to unnecessary escalation of the matter to the Tribunal.

3. Ultimately, the Tribunal held that penalizing the appellant with a penalty equal to 100% of the duty demand was not justified. The Tribunal set aside the Commissioner's order, stating that the penalty was unsustainable given the circumstances. As a result, the appeals were disposed of in favor of the appellant.

4. The judgment highlights the importance of clear communication and appropriate calculation of penalties by authorities to avoid unnecessary disputes and legal proceedings. The Tribunal emphasized the need for transparency and fairness in penalty assessments to prevent undue financial burdens on appellants.