Tribunal overturns penalty for duty non-payment after natural disaster, emphasizing need for mala fide intent

COMMISSIONER OF CUSTOMS, GUNTUR Versus EMPEE SUGARS & CHEMICALS LTD.

COMMISSIONER OF CUSTOMS, GUNTUR Versus EMPEE SUGARS & CHEMICALS LTD. - 2007 (219) E.L.T. 944 (Tri. - Bang.) Issues:
1. Imposition of penalty under Section 11AC of the Act in a case involving non-payment of duty for goods cleared without accounting due to natural calamity.

Analysis:
The judgment revolves around the imposition of a penalty under Section 11AC of the Act due to non-payment of duty for goods cleared without accounting, following a natural calamity. The Commissioner (Appeals) confirmed the Order-in-Original in favor of the respondents, citing the loss of records in floods as the reason for non-accounting. The respondents explained that the floods and cyclone in October 2001 caused the loss of records, leading to the clearance of goods without payment of duty. The Commissioner accepted this explanation, finding no deliberate intention to evade duty. The respondents had paid the excise duty willingly and raised invoices for the cleared goods, indicating no clandestine removal. The judgment emphasized that penalty should be imposed only in cases of mala fide intention, as observed in various legal precedents.

The Revenue challenged the order, arguing that the admission of duty liability for goods cleared without payment necessitated the imposition of a mandatory penalty. The Department sought the imposition of a penalty based on the grounds of the appeal. However, the Appellant contended that the Commissioner's order was just and proper, highlighting that the penalty was not leviable in the present circumstances. The Appellant pointed out that the authorities had considered the loss of records in floods and the lack of intent to evade duty as valid reasons for not imposing the penalty.

Upon review, the Tribunal found that both authorities had exercised discretion in not imposing the penalty due to the loss of records in the natural calamity. The Tribunal noted that there was no deliberate intention to evade duty, as evidenced by the efforts made by the assessee to recover the lost records. The Tribunal upheld the decision of the Commissioner (Appeals) and rejected the Revenue's appeal, citing the applicability of legal precedents and the absence of merit in challenging the decision. The judgment underscores the importance of considering circumstances, intent, and legal precedents in determining the imposition of penalties under the law.