Penalty reduced for duty payment error, appellants compensated, appeal modified

The penalty imposed on the appellants for paying duty from the wrong account was deemed unjustified by the Tribunal. As the duty was paid from the correct account with interest before receiving the show cause notice, the error was rectified and revenue was compensated. The penalty was reduced to Rs. 50,000, and the pre-deposit amount was adjusted against it. The appeal was disposed of with the modification of the impugned order.

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Issues:
- Imposition of penalty on the appellants

Analysis:
The only issue in the appeal was the imposition of a penalty on the appellants. The appellants had paid duty from R.G. 23A Part II instead of the PLA account during the disputed period mentioned in the impugned order. They received a show cause notice (SCN) for this error but had already rectified the mistake by paying the duty again from the PLA account along with interest before receiving the SCN. The Tribunal noted that there was no clandestine removal of goods without duty payment; rather, it was a case of duty being discharged from the wrong account at the time of goods clearance. The appellants were entitled to pay duty from the credit in their account, which was essentially pre-paid duty. Despite the error, the revenue was compensated as the duty was paid from the PLA account along with interest. Therefore, the Tribunal deemed that the penalty equal to the duty amount was not justified. The penalty imposed on the appellants was reduced to Rs. 50,000, and the pre-deposit amount was adjusted against this penalty. Consequently, the impugned order was modified, and the appeal was disposed of accordingly.

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