Penalty unsustainable where extended limitation failed and no gain from evasion was found.

Penalty cannot be sustained where the Tribunal has found the extended period of limitation unavailable to the Revenue, set aside the duty demand, and recorded that there was no motive or gain from evasion. On those findings, the basis for penal consequences disappeared, because the penalty was inconsistent with both the limitation ruling and the absence of any evasion benefit. The Supreme Court held that the penalty was not sustainable and allowed the appeal.

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Issues: Whether the penalty could be sustained after the Tribunal held that the extended period of limitation was not available to the Revenue, quashed the duty demand, and found that there was nothing to gain by evading payment of duty.

Analysis: The Tribunal had reduced the penalty while simultaneously recording that the extended period of limitation was unavailable and that the duty demand itself could not stand. In that background, the finding that the appellant had no motive or gain from evasion removed the basis for sustaining penal consequences. The penalty imposed in those circumstances was inconsistent with the findings on limitation and the absence of any gain from evasion.

Conclusion: The penalty was not sustainable and the appeal was allowed.

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