ORDER
S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 89/2000 dated 23.11.2000 passed by the Commissioner of Customs, Chennai, wherein he has confirmed duty demand of Rs. 1,89,752 and has also imposed a mandatory penalty of like sum under Section 114(A) of the Customs Act. The findings recorded by him in para 11.1 & 12 is reproduced:
I have gone through the available case record including the Show Cause Notice, replies thereto and submissions made during personal hearing carefully. M/s. Shasun Chemicals & Drugs. Ltd.. had imported 37,013.76 kgs. of sodium metal vide Bill of Entry No. 50625 dated 18.9.97 against DEEC advance license No. 19677555 dated 17.9.97 under Notification No. 30/97. On investigation it was found that 4490.64 kgs. of sodium metal was sold in the market in contravention of the condition of the notification 30/97. During the course of investigation the noticee has accepted the diversion and I find that they have also paid duty of Rs. 1,89,752 along with the interest @ 20% amounting to Rs. 1,11,668 vide challan No. SC 0206273 dated 28.2.2000 complying with the demand raised in the show cause notice consequent to the denial of the benefit of Notification No. 30/97.
I deny, the benefit of Notification 30/97 dated 1.4.97 in respect of 4490. 64 kgs. of sodium metal imported vide Bill of Entry No. 50625 dated 18.9.97 against advance license No. 1967758 dated 17.9.97.
I demand duty of Rs. 1,89,752 along with interest @ 24% from the date of clearance. order appropriation of Rs. 3,10,420 remitted vide Misc. Challan No. 0206173 dated 28.2.2000 towards the above dues.
I impose a penalty of Rs. 1,89,752 (Rupees one lakh eighty nine thousand seven hundred and fifty two only) under Section 114(a) of the Customs Act, 1962 on the importers.
2. We have heard Shri S. Murugappan Adv. along with Ms. Pramila, Adv. for appellants and Ld. SDR Shri G.S. Menon and Shri Mani for the Respondent.
3. Ld. Counsel contended that in the present case the appellant had diverted the goods in the market and for which the proceedings were initiated and mandatory penalty had been imposed. It is their contention that there were excuneating (sic) circumstances requiring the appellants to sell the goods in the domestic market as they had several licenses and in some of the licenses sale was permissible. Further it is contended that they had completed the export obligation and therefore duty cannot be confirmed likewise mandatory penalty is not permissible. Ld. Counsel referred to the Apex Court Judgment rendered in the case of CCE, Coimbatore v. Elgi Equipments Ltd. 2001 (128) ELT 52 (SC) wherein it has been held that mandatory penalty need not be equivalent to the amount of duty confirmed in the order. He therefore seeks for setting aside the duty and mandatory penalty in the matter.
4. Ld. SDR points out that when once there is contravention in the license and which does not permit conditional notification and also there is a violation of benefit of DEEC scheme in respect of imported sodium metals and the violation is said to be proved they are required to pay the duty to the extent of goods sold in the market. In view of the violation the imposition of mandatory penalty under Section 114(A) of Customs Act is justified and the same has been upheld by the Apex Court in the Judgment cited by the Counsel. However, it is only the quantum of the penalty which is required to be considered by the Tribunal. He brings to the notice of the Bench very fairly that the Tribunal in the case of CCE, New Delhi v. L.G. Electronics have dismissed the revenue appeal as well as party appeal with regard to imposition of penalty under Section 11AC of the CE Rules. The Revenue had contended that the mandatory penalty was to the extent of the duty imposed while the party had argued conversely. The Tribunal did not agree with both the contentions and in the light of the Madras High Court decision rendered in the case of CCE, Tiruchirappalli-I v. CEGAT, Chennai . He submits that in the present case the violation being established there has to be reasonable amount of penalty to be imposed in this case.
5. We have carefully considered the submissions made before us. We notice that even on the question of confirming of demands with regard to the violation of DEEC scheme and goods being sold in the market the matter has been conclusively decided by the Apex Court in the case of CC, Mumbai v. Virgo Steels . The Tribunal’s order was set aside by the Apex Court and the order passed by the Collector of Central Excise confirming the duty and imposition of penalty for violation of the scheme and for selling the goods in the market was upheld. Therefore, applying the ratio of this Judgment we confirm the duty imposed in the present case in terms of the impugned order. Insofar as the imposition of penalty is concerned the Tribunal has already noted the Madras High Court Judgment in the case of CCE v. LG. Electronics (supra) and has upheld the imposition of penalty. However, the revenue’s contention that imposition of mandatory penalty equivalent to 100% has not been accepted in the light of the Madras High Court Judgment noted therein. Therefore taking into consideration the Apex Court Judgment rendered in the case of CCE v. Elgi Equipments Ltd. (supra) we hold that the Commissioner was not justified in imposing mandatory penalty equivalent to 100% of duty amount in this case. However taking into consideration the overall facts and circumstances of the case and render justice it would be proper to impose a mandatory penalty of Rs. 1 lakh in the matter and to this extent the penalty amount of Rs. 1,89,752 is reduced to Rs. 1 lakh only under Section 114(A) of the Customs Act. Except for this modification there is no merit in the appeal and hence it is rejected.