Mandatory penalty in certain cases - CBEC's Customs Manual 2023 - Customs

7. Mandatory penalty in certain cases: 7.1 Section 114A of the Customs Act, 1962 deals with imposition of mandatory penalty in certain cases. Thus, in cases where the duty has not been levied or has been short levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any willful misstatement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under Section 28(8) of the Customs Act, 1962 shall also be liable to pay a penalty equal to the duty or interest so determined. If such duty or interest, as the case may be, as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within 30 days from the date of communication of the order, the amount of penalty liable to be paid by such person under this section shall be 25% of the duty or interest, as the case may be, so determined. Further if the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso. 7.2 If the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate tribunal or, as the case may be, the Court, then for the purpose of this section, the duty or interest as reduced or increased, as the case may be, shall be taken into account. The duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate tribunal or, as the case may be, the Court, then, the benefit of reduced penalty shall be available under the first proviso shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon, and 25% of the consequential increase in penalty have also been paid within 30 days of the communication of the order by which such increase in the duty or interest takes effect. If penalty has been levied under section 114A, no penalty shall be levied under Sections 112 or 114 of the said Act. Any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.