Penalty reduction for duty-paid waste and scrap dispute where bona fide belief justified lower penalty

Penalty on duty-paid waste and scrap generated at a job worker's factory was considered excessive because the duty liability had already been accepted and fully discharged. With only the quantum of penalty surviving, the explanation of bona fide belief was accepted as a mitigating factor, and the penalty was reduced from Rs. 10 lakhs to Rs. 50,000 while the appeal was otherwise rejected.

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Issues: Whether the penalty imposed was excessive and required reduction in view of the facts and circumstances.

Analysis: The duty liability on the waste and scrap generated at the job workers' factory was accepted and the duty stood fully paid. The only surviving question was the quantum of penalty. Considering the circumstances and the explanation that the non-payment occurred under a bona fide belief, the penalty was found to be on the higher side.

Conclusion: The penalty was reduced from Rs. 10 lakhs to Rs. 50,000, and the appeal was otherwise rejected.

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