TMI Blog2006 (4) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... tion regulation etc. by the goods or the importer/abettor and may not necessarily result of in duty implications penalty in such cases could be upheld as imposition of penalty under these section, cannot be only to be related to duty evasion. Thus, we would answer the reference as follows : There is no reason to differ with the findings of the L.B. in case of Machino Montell [ 2004 (4) TMI 101 - CESTAT, NEW DELHI] uphold the penal consequences of Section 114A when duty short paid are deposited before the issue of a show cause notice. However, penal consequences liability emerging from other provisions of Customs Act, 1962 can be separately attracted, on the facts of each case. The matter may now be sent back to the referring bench to decide the appeal. - HON'BLE JYOTI BALASUNDARAM, VICE-PRESIDENT, KRISHNA KUMAR (J) AND S.S. SEKHON (T), MEMBERS For the Appellant : V.S. Nankani, K.I. Vyas, Naresh Thakkar, Madhur Baya and V.K. Jain, Advs For the Respondent : Ajay Saxena, SDR and M.K. Srivastava, Adv. Order S.S. Sekhon, Member (T) 1. This matter has been referred to the Larger Bench for decision on the following points : (i) whether the decision in the case of Machino Montell Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be issued/served under the provisions of Section 28(1) of the Customs Act, 1962. (ii) That no notice is envisaged under sub-section 28(1) to be issued on account of the payment of duty amounts effected before issue of such notice would imply that no further determination of duty by the proper officer was required to be arrived at. Since there would be no determination of duty under Section 28(2B), the provisions of Section 114A could not be attracted as would appear clearly from reading of provisions Section 114A of the Customs Act, 1962. (c) Since legislative prescribed procedure, is not to issue notice, in cases where payments of the amounts at a time prior to the notice have been effected, is without any pre-conditions as regards causes/reasons for such payments required to be made or effected, it would not make a difference whether such duty was paid before or after the intervention by the departmental officers in any form or manner, this would include the fact of search, seizure etc. Therefore we cannot find the view taken in the case of M/s. Saheli Synthetics Pvt. Ltd. vide Order Nos. A/681 to 683/2005-WZB/C-III, dtd 19-7-2005 to uphold that there is a call for a differenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Jay Yuhshin L v. CCE, Delhi reported in 2000 (119) E.L.T. 718 (LB) in Paras 7, 11 12 would be binding since there is no stay granted by the Hon'ble Apex Court, only a Civil Appeal being admitted as reported in the 2002 (139) E.L.T. A179 (S.C.). It was contended that the Jay Yuhshin view should prevail as decision in the case of Machino Montell - 2004 (168) E.L.T. 466 (T-LB) - 2004 (62) RLT 709 LB would be per incurium. It is submitted that the element of fraud or suppression or intention to evade duty if found, then, even when duty was paid prior issue of show cause notice, penalty was imposable, was view as upheld in the case of Jay Yuhshin v. CCE, Delhi - 2000 (119) E.L.T. 718 (LB) and would be binding in this case. This bench is not considering the validity of the decision in the case of Machino Montell - 2004 (168) E.L.T. 466 (Tri. - LB) = 2004 (62) RLT 709 (LB)], but is considering what has been upheld by the Larger Bench in the case of Machino Montell - 2004 (168) E.L.T. 466 (Tri. - LB) = 2004 (62) RLT 709 (LB). The Machino Montell decision is a later decision and the ratio therein is only required to be considered. The plea of reliance on decision in the case of Jay Yu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words one year and 'six months', the words 'five years' were substituted. Explanation. - where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be. (2) The proper officer, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. (2A) Where any notification has been served on a person under sub-section (1), the proper officer, - (a) in case any duty has not been levied, or has been short levied, or the interest has not been paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Budget, 2001). (3) For the purposes of sub-section (I), the expression 'relevant date' means - (a) in a case where duty is not levied, or interest is not charged, the date on which the proper officer makes an order for the clearance of the goods. (b) in a case where duty is provisionally assessed under Section 18, the date of adjustment of duty after the final assessment thereof. (c) in a case where duty or interest has been erroneously refunded, the date of refund; (d) in any other case, the date of payment of duty or interest. Has force and cannot be rejected based on placing reliance on the Public Notice No. 34/2001/Cus., dated 22-11-2001 of Commissioner, Mangalore to the following effect. OFFICE OF THE COMMISSIONER OF CUSTOMS : NEW CUSTOM HOUSE PANAMBUR, MANGALORE 575 010. C.NO VIII/10/14//2000/Adjn Misc. dated 22-11-2001 PUBLIC NOTICE NO. 34/2001/Cus. The importers/exporters/CHAs/Steamer Agents are hereby informed that in Section 28 of the Customs Act, 1962, a new sub-section (2)2B has been inserted by Section 103 of the Finance Act, 2001 (w.e.f. 11-5-2001) 1. Following this amendment, where any duty has not been levied or has been short levied or erroneously re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always required to be invoked and imposed. Penalty under fiscal statutes is not a retributive impost. 1.7 As regards the ld. DR's plea of penalty being mandatory it is found that the full bench of Apex Court in the case of State of Madhya Pradesh v. Bharat Heavy Electricals - 1998 (99) E.L.T. 33 (S.C.) have laid down. 12. It is not necessary for us to decide whether the provision for levy of penalty equal to ten times the amount of entry tax would be confiscatory and, therefore, ultra vires since Mr. Sanghi, in fairness, submitted that the State treats it as the maximum limit and not fixed amount of penalty leaving no discretion for imposition of lesser penalty. This stand of the State itself concedes that the assessing authorities are not bound to levy fixed penalty equal to ten times the amount of entry tax whenever the provisions of Section 7(5) are attracted. Depending upon the facts of each case the assessing authority has to decide as to what would be the reasonable amount of penalty to be imposed, the maximum being ten times the amount of the entry tax. So construed, sub-section (5) of Section 7 cannot be regarded as confiscatory. Consequently, this also cannot be a grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under Section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, all the provisions of chapter IV shall so far as may be apply to such assessment a restricted content; in terms it says that all the provisions of chapter IV shall apply so far as may be to assessment of firms which have discontinued their business. By Section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest contumacious conduct of the assessee Similar view is taken by the Allahabad High Court in the case of Lal Chand Gopal Das v. CIT [1963 (48) ITR 324] Allahabad High Court observed that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the machinery of assessment and the penalty was merely an additional tax imposed as a part of the machinery of assessment and the penalty was merely an additional tax impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o bring on record reasons for invocation of extended period; there are several decisions where Hon'ble Tribunal found elements of suppression; in such cases, Tribunal refused to accept the ratio of Machino Montell's decision the mere fact that the assessee paid entire amount of duty, when the offence of clandestine removal was detected by Revenue, would not be sufficient so as to not to impose any penalty upon them, although the same may be a mitigating factor for reducing the quantum of penalty. The following decisions where duty was paid before SCN was issued but penalty was imposed and upheld by the Courts were cited. (a) CCE v. Deepak Spinners Ltd. - 2005 (179) E.L.T. 93 (b) Kanodla Technoplast Pvt. Ltd. v. CCE, Delhi - 2004 (95) ECC 281 (c) CCE, Indore v. Sai Machine Tools - 2004 (170) E.L.T. 100 (d) CCE, Delhi v. Toshi Auto Ind. - 2005 (183) E.L.T. 48 (e) CCE, Indore v. S.P. Tobacco Pvt. Ltd. - 2005 (181) E.L.T. 136 (f) J.K. Pharma Ors Shri Ramesh Patel v. CCE, Ahmedabad - 2005 (102) ECC 406 (Tri-Mum.) (g) Siva Hygenic Products v. CCE, Madurai - 2005 (186) E.L.T. 178 (T) = (68) RLT 771 (h) Brakes India v. CCE, Chennai - 2005 (184) E.L.T. 179 (i) Jasch Indus v. CCE, De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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