THE SRI VENKATESA MILLS LTD. Vs. COMMISSIONER OF CUSTOMS
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
The Sri Venkatesa Mills Ltd.
COMMISSIONER OF CUSTOMS
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Jyoti Balasundaram, Vice -President -
(1.)THE duty demand of Rs. 12,31,208/ - is on 247379 kgs. of raw cotton imported free of duty under advance licences but not utilized for the manufacture of yarn for export but instead utilized for manufacture of yarn sold in the domestic market, together with interest. The assessees do not challenge the duty demand but only plead for setting aside the penalty of equal amount imposed upon them in terms of Section 112(a) and Section 114A of the Customs Act, 1962 on the ground that non -fulfilment of export obligation which is the reason for confirmation of duty demand, was due to fall/crash in the export market and not with intention to evade payment of duty so as to warrant penalty.
(2.)WE have heard both sides. We find that provisions of Section 112(a) are attracted against the assessees for violation of the provisions of Section 111(o). For the purpose of imposing penalty under Section 112(a), intention to evade payment of duty or any mens rea is not an essential requirement. On the other hand, this section also does not provide for mandatory penalty. The appellants have explained in the reply to the show -cause notice and before the adjudicating authority that due to severe economic crisis and the subsequent currency devaluation, the prices of cotton yarn had fallen very much and due to this reason, the buyers did not open the L/C although they had contracts, and that the assessees' stocks were piled up due to production of the cotton yarn and due to sluggish local market condition, they had no option but to divert the goods to the local market on payment of duty at cheaper prices. This submission has not been controverted by the adjudicating authority in the impugned order. Therefore, while we agree with the ld. SDR that penalty is called for due to admitted violation of Section 111(o) under Section 112(a), we are of the view that the mandatory penalty is not called for in this case. Having regard to the totality of facts and circumstances of the case, and the plea of the assessees of clearance of the yarn made out of the cotton imported duty free in the local market at a cheaper price, we reduce the penalty on the assessees to Rs. 1,50,000/ - (Rupees One lakh fifty thousand only).
The appeal is partly allowed.
(Dictated and pronounced in open court)
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