SEZ unit gets 25% penalty reduction under Section 114A after authority failed to offer statutory option

CESTAT Ahmedabad allowed appeals partly in a case involving SEZ unit's mis-declaration of goods quantity and value. The tribunal held that since the adjudicating authority failed to provide the statutory option for reduced penalty under Section 114A, the appellant was granted 25% penalty reduction subject to payment of confirmed duty, interest, and reduced penalty within one month. Penalty under Section 112(a) was set aside as Section 114A penalty precludes imposition of penalties under other sections. The director's penalty was reduced from Rs. 5 lakh to Rs. 3 lakh under Section 112(a) and from Rs. 2 lakh to Rs. 1 lakh under Section 114A considering overall circumstances.

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Issues:
1. Mis-declaration of goods and customs duty evasion.
2. Confiscation of goods and imposition of penalties under various sections of the Customs Act, 1962.
3. Appeal against the order passed by the Principal Commissioner of Customs.

Issue 1: Mis-declaration of goods and customs duty evasion:
The appellant, an SEZ unit, mis-declared the quantity and value of goods in a container leading to a show cause notice for confiscation of goods valued at Rs. 2,21,21,536 under various sections of the Customs Act, 1962. The Principal Commissioner of Customs adjudicated the matter, confiscating the goods and imposing a penalty of Rs. 10,00,000 under Section 112(a) of the Act.

Issue 2: Confiscation of goods and imposition of penalties:
The Principal Commissioner's order confiscated the seized goods and imposed a redemption fine of Rs. 10,00,000 as an alternative to confiscation. Additionally, a penalty of Rs. 10,00,000 was levied on the appellant under Section 112(a) of the Customs Act, 1962. The appellant appealed this order before the Tribunal seeking relief regarding the penalty and the option of a reduced penalty of 25%.

Issue 3: Appeal against the order:
The appellant appealed the Principal Commissioner's order before the Tribunal, arguing that the option of a 25% penalty reduction was not provided in the original order. The Tribunal upheld the confirmation of demand, redemption fine, interest, and penalty under Section 114A. However, it agreed that the appellant should be given the option of a reduced penalty of 25% under Section 114A, provided the appellant pays the total confirmed duty, interest, and penalty within a month.

In the judgment, the Tribunal carefully considered the submissions of both parties and analyzed the legal provisions under the Customs Act, 1962. It concluded that the penalty under Section 112(a) could not be imposed since a penalty under Section 114A had already been levied. The Tribunal also reduced the penalty on the director of the appellant company, considering the overall circumstances of the case. Ultimately, the appeals were partly allowed, reducing the penalties imposed on the appellant and its director in line with the legal provisions and the facts of the case.

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