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Commissioner of Central Excise, Meerut v/s M/s. Dewan Rubber Industries Ltd. & Others

    Civil Appeal Nos. 308-312 of 2005

    Decided On, 27 April 2015

    At, Supreme Court of India


    For the Appellant: Kritika, Sadhana Sandhu, B. Krishna Prasad, Advocates. For the Respondent: Subramonium Prasad, Manav Vohra, Neha Aggarwal, Nisha Bagchi, Rajiv Dalal, Advocates.

Judgment Text

1. In these appeals preferred by the Department the only issue pertains to penalty. The adjudicating authority had imposed the penalty of Rs.2,11,20,918/- under Section 114A of the Customs Act, 1962, on the appellant. Keeping in view that same was the amount of duty which was levied on the goods imported that was evaded by the respondent herein, the Tribunal has upheld the duty by affirming the finding of the adjudicating authority holding that the system imported by the respondent was removed without permission from the Revenue and was being used in a premises other than 100% EOU, the condition subject to which the same is allowed to be imported free duty under Notification 13.81-CUS.

2. Thus, there is no dispute that the respondent had cleared the goods taking benefit of Notification No.13/81-CUS without paying any duty and it was found that the respondent had not adhered to the conditions stipulated in the aforesaid Notification, namely, the system imported was to be used in the premises which is 100% EOU. For this reason confiscation order passed by the Customs Authorities and levy of duty which was payable has been upheld by the Tribunal. Even the redemption fine of Rs.25 lakhs is maintained by the Tribunal. However, when it came to the question of penalty the Tribunal has reduced the said amount of Rs.50 lakhs. We find that in taking this course of action the only justification given by the Tribunal is that the penalty imposed is the maximum penalty which was not warranted.

3. The reasons given by the Tribunal are that the condition of Notification was contravened only on or after 10.12.1996 when the system was withdrawn and therefore maximum penalty was not warranted.

4. We find that the provision of Section 114A of the Customs Act, 1962, as they existed at the relevant time confirmed the same on the part of the adjudicating authority in the matter of imposition of penalty. At the same time we are of the opinion that having regard to the valuation of the conditions contained in Notification No.13/81-CUS reducing the penalty but even less than 25%, in the facts of thes

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e cases, was not warranted. We, therefore, enhance the penalty to 50% of the duty. 5. The appeals are partly allowed in the aforesaid terms. Subject to the aforesaid modification the order of the Tribunal otherwise stands.