Customs Tribunal Reduces Penalty to 15% for Non-Payment of Duty

The Tribunal allowed the appeals in favor of the appellants, granting them the benefit of paying a reduced penalty of 15% instead of the earlier 25% on the non-payment of duty amount under the amended Section 28(5) of the Customs Act, 1962. The impugned order confirming the penalty of 25% was set aside, providing relief to the appellants in accordance with the amended provisions of the Act.

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Issues:
Whether the benefit of reduced penalty under the amended Section 28(5) of Customs Act, 1962 should be available to the appellants for settlement of their case under Section 28(6) of the Act.

Analysis:
The issue involved in these appeals pertains to the availability of the benefit of reduced penalty under the amended Section 28(5) of the Customs Act, 1962 to the appellants for settling their case under Section 28(6) of the Act. The appellants were issued a show cause notice by the Officers of DRI for undervaluation and mis-declaration of goods imported by them. The appellants did not contest the allegations and deposited the proposed duty demand along with interest and 25% of penalty, seeking closure of their case under Section 28(6) of the Act. Subsequently, the provisions of Section 28(5) were amended, reducing the penalty to 15% instead of the earlier 25%. The appellants requested the adjudicating authority to consider the reduced penalty amount, but the original authority did not grant this benefit in the impugned order.

Upon considering the amended provisions of Section 28(5) of the Customs Act, 1962, it was noted that the benefit of reduced penalty of 15% was extended to cases pending for closure with the adjudicating authority. The explanation appended to the amended provisions clarified that cases where a show cause notice had been issued but an order determining duty had not been passed before the amendment would be deemed concluded if full payment was made within thirty days of the amendment. In this case, although the show cause notice was issued before the amendment, the order was passed after the amendment, making the appellants eligible for the reduced penalty.

Consequently, the Tribunal set aside the impugned order confirming the penalty of 25% on the appellants and allowed the appeals in favor of the appellants, granting them the benefit of paying a reduced penalty of 15% on the non-payment of duty amount. The appeals were thus allowed in favor of the appellants, providing them relief in accordance with the amended provisions of the Customs Act, 1962.

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