2025 (1) TMI 557 - AT - Customs

Appellant wins appeal as enhanced penalty set aside, original Rs.10,000 penalty restored for procedural violations

M/s. Shyam Metalics & Energy Ltd. Versus Commissioner, CGST, Central Excise & Customs, Bhubaneswar

M/s. Shyam Metalics & Energy Ltd. Versus Commissioner, CGST, Central Excise & Customs, Bhubaneswar - TMI 1. ISSUES PRESENTED and CONSIDEREDThe judgment primarily revolves around the following legal issues:Whether the appellant contravened the provisions of the Customs (Provisional Duty Assessment) Regulations, 2011 by failing to submit the required documents within the stipulated time.Whether the penalty imposed by the adjudicating authority was appropriate or whether the penalty should be enhanced as per the appeal by the Revenue.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Non-submission of Required DocumentsRelevant Legal Framework and Precedents: The Customs (Provisional Duty Assessment) Regulations, 2011, particularly Regulation 3(3), which mandates the submission of documents within one month of provisional assessment.Court's Interpretation and Reasoning: The court acknowledged that the appellant failed to submit the necessary documents within the prescribed time due to pending appeals in higher courts, which affected their ability to comply.Key Evidence and Findings: The appellant had executed Provisional Duty Bonds agreeing to submit the documents, but delays were attributed to ongoing legal proceedings.Application of Law to Facts: The court found that the appellant's inability to submit documents was not deliberate and was influenced by external legal factors.Treatment of Competing Arguments: The Revenue argued for a higher penalty due to non-compliance, while the appellant contended that the penalty should be minimal due to procedural delays caused by external factors.Conclusions: The court concluded that the appellant's delay was not deliberate, and a minimal penalty was justified.Issue 2: Appropriateness of the PenaltyRelevant Legal Framework and Precedents: Regulation 5 of the Customs (Provisional Duty Assessment) Regulations, 2011, which allows for a penalty up to Rs. 50,000 for non-compliance.Court's Interpretation and Reasoning: The court emphasized discretion in penalty imposition, noting that maximum penalties are not mandatory for every infraction.Key Evidence and Findings: The initial penalty was Rs. 10,000, deemed sufficient by the adjudicating authority, considering the procedural nature of the infraction.Application of Law to Facts: The court applied precedents where minimal penalties were imposed for procedural delays without revenue implications.Treatment of Competing Arguments: The Revenue's argument for a higher penalty was based on the number of pending Bills of Entry, while the appellant argued for maintaining the original penalty.Conclusions: The court set aside the enhanced penalty, maintaining the original penalty of Rs. 10,000 as sufficient for the procedural lapse.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'The penalty of Rs.10,000/- imposed by the Ld. Assistant Commissioner would be sufficient to meet the ends of justice.'Core Principles Established: The discretion in imposing penalties for procedural lapses should consider the circumstances and intent behind the delay. Maximum penalties are not obligatory unless justified by deliberate non-compliance or revenue implications.Final Determinations on Each Issue: The court upheld the original penalty of Rs. 10,000, rejecting the Revenue's appeal for enhancement, and allowed the appellant's appeal.The judgment underscores the need for discretion in penalty imposition, particularly when procedural delays are influenced by external factors such as ongoing legal proceedings, and emphasizes that penalties should reflect the nature and intent of the infraction rather than being punitive for procedural lapses without revenue loss.