Special Additional Duty exemption failed on sale in a tax-free area; penalty was deleted for lack of statutory authority.

Exemption from Special Additional Duty of Customs was unavailable because the imported onion was sold in Punjab, where it was sales-tax free, so the notification's condition that the goods not be sold in an area where no tax was chargeable was not met; duty demand and interest therefore followed. Penalty was not sustainable because a levy cannot carry penal consequences unless the governing statute expressly authorises penalty, and no such enabling provision existed for Special Additional Duty of Customs; the penalty was set aside.

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Issues: (i) whether the appellants were entitled to exemption from Special Additional Duty of Customs under the relevant notification when onion was sold in a State where no sales tax was chargeable; and (ii) whether penalty could be imposed under the Special Additional Duty of Customs levy in the absence of an enabling provision.

Issue (i): whether the appellants were entitled to exemption from Special Additional Duty of Customs under the relevant notification when onion was sold in a State where no sales tax was chargeable.

Analysis: The exemption was conditional and was available only where the imported goods were not sold from a place in an area where no tax was chargeable on sale or purchase of such goods. Since onion was found to be sales-tax free in Punjab, the condition for availing the exemption was not satisfied. The duty demand and consequential interest therefore followed from the wrongful availment of the exemption.

Conclusion: The appellants were not entitled to the exemption and the demand of duty with interest was upheld.

Issue (ii): whether penalty could be imposed under the Special Additional Duty of Customs levy in the absence of an enabling provision.

Analysis: Penalty can be sustained only where the statute creating the levy also contains an express provision authorising penalty. The record showed no such provision in the law governing Special Additional Duty of Customs.

Conclusion: The penalty was not sustainable and was set aside.

Final Conclusion: The duty demand and interest were sustained, but the penalty was deleted, so the relief was only partial in favour of the assessee.

Ratio Decidendi: A penalty cannot be imposed for liability under Special Additional Duty of Customs unless the governing statute expressly provides for such penalty, and an exemption conditioned on non-taxability at the place of sale is unavailable where that condition is not fulfilled.

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