Legal principle

Under Section 114A of the Customs Act, 1962, the penalty is equal to the duty or the interest, as the case may be, as determined under Section 28 — the disjunctive 'or' means the penalty is not duty plus interest.

Court decision

The Tribunal dismissed the revenue's appeal, holding that the penalty under Section 114A is equivalent to the duty demanded under Section 28 or the interest demanded, as the case may be, and not the sum of duty plus interest; the Commissioner's order restricting the penalty to the duty of Rs. 11,13,265/- was upheld in favour of the respondent.

Facts

The Commissioner of Customs (Export), JNCH Nhava Sheva, by Order-in-Original No. 18/2010 dated 13.08.2010, ordered recovery of duty of Rs. 11,13,265/- along with interest from the importer, M/s Fenil Enterprises, under Sections 28 and 28A of the Customs Act, 1962, and imposed an equal penalty of Rs. 11,13,265/- under Section 114A. Fenil Enterprises was both the importer and the licence holder in the case. No penalty was imposed under Section 112 because Section 114A was held to preclude penalties under both provisions. The specific goods involved are not identified in the extract. The revenue appealed, confining its challenge to the quantum of the Section 114A penalty.

Key provisions

• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28A, Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods