SETIA WOOLLENS PVT. LTD. Vs. CC

JUDGEMENT

(1.) THIS appeal is directed against Order -in -Appeal dated 1.12.2004 which upheld the Order -in -Original imposing penalty on the appellants under Section 114A read with Section 112(a) of the Customs Act, 1962.

(2.) THE issue involved in this case is regarding non -applicability of the benefit of Notification No. 56/98 -Cus dated 1.8.98 to the appellants. The appellants imported Grassy Wool and availed the benefit of Notification No. 56/98 -Cus and 22/99. Subsequently it was found that the appellants are not eligible for the benefit of notification. The appellants deposited the amount of duty and interest thereon. Show cause notice was issued to the appellants for imposition of penalty and confiscation. The adjudicating authority imposed the penalty and refrained from confiscation as the goods were not available. On appeal learned Commissioner (Appeals) upheld the adjudication order.

(3.) CONSIDERED the submissions made by both sides and perused the records. I find that during the relevant period the provisions of Section 3A(4) of the Customs Tariff Act reads as under: (4) The provisions of the Customs Act, 1962 (52 of 1962), and the rules and the regulations made thereunder, including those relating to refunds and exemptions from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. The penalty sought to be imposed on the appellants is on the interpretation of above said section. I find that an identical provision was interpreted by three Judges Bench of the Hon'ble Supreme Court in the case of CCE v. Orient Fabrics (P) Ltd. reported at at Para 5 & 6 which reads as under: 5. In order to appreciate the issue, it is relevant to set out the Sub -section (3) of Section 3 of the Act, as applicable in this matter and which runs as under: SECTION 3: levy and collection of additional duties: (1) ... (2) ... (3) The provisions of Central Excises and Sale Act, 1944 and the rules made thereunder including those relating to refunds and exemption from duty shall, so far as may be apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in Sub -section (1). 6. A perusal of the said provisions shows that the breach of the provision of the Act has not been made penal or an offence and no power has been given to confiscate the goods. It only provides for application of the procedural provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder. It is no longer res integra that when the breach of the provision of the Act is penal in nature or a penalty is imposed by way of additional tax, the constitutional mandate requires a clear authority of law for imposition for the same. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. The authority has to be specific and explicit and expressly provided. The Act created liability for additional duty for excise, but created no liability for any penalty. That being so, the confiscation proceedings against the respondents were unwarranted and without authority of law. From the apex Court it is very clear that the provisions of Section 3(3) of the Additional duty of Excise under goods of special importance and provisions of Section 3(4) of this case are identical. As the apex Court has specifically held that to impose penalty there has to be provision under the Section under which penalty has to be imposed, it may be noted that provisions of Section 3A(4) do not provide for imposition of any penalty for violation of the provisions of Section 3A and the notification issue thereunder. In the absence of any such provision penalty cannot be imposed on the appellants.