(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. This appeal is filed by the revenue calling in question legality of the judgement and order dated 21.8.2006 passed by the Customs, Excise & Service Tax Tribunal (“the CESTAT” for short). Counsel for the revenue pointed out that that while admitting the appeal, the question which was framed made a mention to section 114 of the Customs Act, whereas appropriately the same should be to section 114A of the Customs Act. In the result, the question is re-framed in the following manner :
“Whether the Tribunal was justified in law in reducing the amount of penalty under section 114A of the Customs Act, 1962?”
2. The question arises in following background. The respondent-assessee was visited with show cause notice proceedings for recovery of unpaid customs duty, penalty and interest. Upon completion of the proceedings, the adjudicating officer passed his Order-in-Original dated 29.10.2003, ordering confiscation of the goods, confirming the customs duty demand with interest. He also imposed penalty of Rs.1,12,553/- on the respondent under section 112 read with section 114A of the Customs Act. Since we are concerned with this portion of the order, we re-produce the relevant portion of the adjudicating officer, which reads as under :
“[iv] I impose a penalty of Rs.112553/- (Rupees one lacs twelve thousand five hundred fifty three only) on M/s Eagle Fibres Pvt. Ltd., Plot No.57, K-3, Village Pipodara, Taluka Mangrol, Dist. Surat, under section 112 read with section 114A of the Customs Act, 1962.”
3. The entire order was carried in appeal by the respondent- assessee. The Appellate Commissioner by his order dated 24.8.2005 dismissed the appeal. Further aggrieved by such order, the assessee approached the CESTAT. The CESTAT by the impugned order, confirmed the redemption fine, duty as well as interest in view of the admission of the Director of the Company during the investigation. The CESTAT, however, with regard to the penalty, stated that “I am of the view that the imposition of penalty equal to the duty amount is not justifiable in this case and hence I reduce the penalty of Rs.25,000/-.”.
4. Having heard the learned counsel for the assessee, the respondent being unrepresented, we find that the CESTAT committed error in reducing the penalty amount and that too, without assigning any reasons. Section 114A of the Customs Act provides for penalty for short levy or non- levy of duty in certain cases. Relevant portion thereof reads as under :
“114A. Penalty for short-levy or non-levy of duty in certain cases. - Where the duty has not been levied or has not 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 wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined:
Provided that where such duty or interest, as the case may be, as determined under sub-section (2) of section 28, and the interest payable thereon under section 28AB, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty- five per cent. of the duty or interest, as the case may be, so determined:
Provided further that 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:”
5. From the above, it can be seen that under section 114A of the Act, where the duty has not been levied or has not 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 wilful mis-statement or suppression of facts, the person liable to pay such duty would also be liable to pay penalty equal to the duty or interest as determined under sub- section (2) of section 28 of the Act. The question of reduction of such penalty would arise when the person concerned satisfies the requirements of the first proviso read with further proviso to the said section. The first proviso to section 114A provides for reduction of such penalty to one-fourth when such duty or interest determined under sub-section (2) of section 28 along with interest payable thereon is paid within thirty days from the date of communication of the order of the proper officer determining such duty. In the present case, it is not even the case of the respondent that he had paid the duty with interest within thirty days and that therefore, under proviso to section 114A of the Act, he was entitled to reduction of penalty to twenty five per cent of the full amount of duty. Under the circumstances, in our view, the CESTAT committed serious error in substantially reducing the penalty and that too, without assigning any reasons at all.
6. In the result, the question is answered in favour of the revenue. Decision of the CESTAT is set aside. The appeal is disposed of accordingly.
[AKIL KURESHI, J.] [HARSHA DEVANI, J.] parmar*