2006 (4) TMI 411 - AT - Customs

Tribunal overturns penalty under Customs Act, citing non-applicability of Notification No. 56/98-Cus.

The Tribunal ruled in favor of the appellants, setting aside the penalty imposed on them under Section 114A read with Section 112(a) of the Customs Act, ... Penalty - Interpretation of statutes - Penal provisions Issues:Non-applicability of Notification No. 56/98-Cus. to the appellants.Analysis:The appeal was filed against the Order-in-Appeal that upheld the penalty imposed on the appellants under Section 114A read with Section 112(a) of the Customs Act, 1962. The issue revolved around the non-applicability of the benefit of Notification No. 56/98-Cus. dated 1-8-98 to the appellants. The appellants had imported Grassy Wool and initially availed the benefits of Notification Nos. 56/98-Cus. and 22/99. However, it was later discovered that the appellants were not eligible for the benefit of the notification. Consequently, a show cause notice was issued for imposing a penalty and confiscation. The adjudicating authority imposed a penalty and refrained from confiscation due to the unavailability of the goods. The learned Commissioner (Appeals) upheld the adjudication order.Upon considering the submissions and perusing the records, the Tribunal examined the provisions of Section 3A(4) of the Customs Tariff Act during the relevant period. The penalty sought to be imposed on the appellants was based on the interpretation of this section. The Tribunal referred to a similar provision interpreted by a three-Judge Bench of the Supreme Court in the case of CCE v. Orient Fabrics (P) Ltd. The Supreme Court held that for the imposition of a penalty, there must be a specific provision under the relevant section. The Tribunal noted that the provisions of Section 3A(4) did not provide for the imposition of any penalty for violations. Therefore, in the absence of such a provision, the penalty could not be imposed on the appellants.Based on the above analysis and the precedent set by the Supreme Court, the Tribunal set aside the penalty imposed on the appellants. The decision was made in line with the Supreme Court's ruling in the case of Orient Fabrics (P) Ltd. The appeal was allowed to the extent of setting aside the penalty, in accordance with the legal principles established by the higher court.Conclusion:The Tribunal ruled in favor of the appellants, setting aside the penalty imposed on them under Section 114A read with Section 112(a) of the Customs Act, 1962, based on the non-applicability of Notification No. 56/98-Cus. to the appellants. The decision was guided by the interpretation of relevant legal provisions and the precedent established by the Supreme Court in a similar case.