Penalty for deliberate duty evasion sustained despite prior payment of differential duty

Penalty is sustainable where goods are deliberately cleared in the name of a consignee, but the surrounding correspondence and statements show they were actually intended for a duty-paid godown and later resale. The stated explanation of diversion on telephonic instructions was found inconsistent and unconvincing, supporting a finding that the clearance device was adopted to avoid proper duty liability. Prior payment of differential duty before the show cause notice did not erase the deliberate character of the conduct or defeat penalty.

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Issues: Whether penalty imposed for clearing fabrics in the name of a consignee, while the goods were ly intended for the duty-paid godown and subsequent resale, was justified on the finding of intent to evade duty.

Analysis: The appellant's own correspondence and statements showed that goods cleared against purchase orders were sometimes returned to the duty-paid godown and resold at prices above or below the approved price. The explanation that the goods were diverted on telephonic instructions was found inconsistent and unconvincing. On the facts, the lower authorities were justified in holding that the goods were not meant for supply to the named consignee but were deliberately cleared in that manner to avoid proper duty liability. Payment of differential duty before the show cause notice did not negate the deliberate character of the conduct.

Conclusion: The penalty was rightly imposed because the appellant had deliberately adopted a device to evade duty.

Final Conclusion: The challenge to penalty failed, and the order sustaining the monetary penalty was upheld.

Ratio Decidendi: Where goods are deliberately cleared in the name of a consignee though they are ly intended for a duty-paid godown, and the conduct shows intent to evade duty, penalty is sustainable notwithstanding prior payment of differential duty.

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