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2007 (12) TMI 29

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..... ated 30.09.03. Against the same impugned order, the revenue has filed appeals No. E/34/04 and E/35/04 respectively. 2. In the impugned order, the Commissioner (Appeals) had confirmed the orders of the original authority demanding respectively Rs. 11,69,426/- and Rs.15,66,767/- being modvat credit availed by the appellants against additional duty of customs discharged between June'98 to September'98 using DEPB scrips on imports of inputs made by the assessee. The Commissioner (Appeals), however, vacated a penalty of Rs. One lakh each imposed on M/s. Madura Coats Ltd. by the original authority. 3. The appeals filed by the assessee seek to vacate the demand confirmed by the lower appellate authority. The assessee has relied on the r .....

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..... appeals filed by the assessee are liable to be dismissed. Ordered accordingly. 7. In the appeals No.E/34/04 No. E/35/04, filed by the Revenue, it is prayed that the penalties vacated by the Commissioner (Appeals) may be restored. It is argued that mens rea was not necessary to impose penalty if the assessee had committed a default in complying with the statute. The penalty imposed by the original authority was in order and justified. The department has relied on the judgments of the Apex Court in Gujarat Travancore Agency Vs. Commissioner of Income Tax reported in 1989 (42) ELT 350 (S.C.) and R.S. Joshi Vs. Ajit Mills reported in AIR 1977 SC 2279. 8. The authorized representative of the assessee submits that penalt .....

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..... State of Orissa - 1978 (2) E.L.T. (J159) (S.C.), the Hon'ble Apex Court observed as follows: "The discretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute". We find that the lower appellate authority rightly vacated the penalty imposed on the assessee. Therefore, the appeal filed by the revenue is devoid of merit .....

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