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Clarification Regarding Levy of Penalty under Section 114A of Customs
Act, 1962
Customs
Circular No. 61 dated 20th September 2002
It
has been reported that a number of show cause notices were issued proposing the
demand of not only duty, but also interest payable in terms of provisions of
para 128 of the Hand Book of Procedures (1st April, 1993 � 31st
March, 1997). While the Show Cause Notices have quantified/ specified the amount
of duty, the interest to be demanded has not been specified, although demands
have been raised. It has been reported that in all such cases, penalty under
section 114A is being imposed equivalent to the amount of duty which stands
determined on the date of adjudication order. The Board has been requested to
clarify as to whether mandatory penalty imposed under section 114A of the
Customs Act, 1962 would be equal to the amount of duty or it would be equal to
duty plus interest. Section 114A provides for levy of penalty equal to the duty
or interest payable by a person in cases involving collusion or any wilful mis-statement,
or suppression of facts by the said person. Conjunction �or� in section 114A
seems to be creating confusion at the field level.
2. The matter has been examined in consultation
with the Ministry of Law. The Ministry of Law, has stated that Maxwell�s
Interpretation of Statutes (p-229) while dealing with conjunctions �or� and
�and� provides that -
�To carry out the intention of
the legislature, it is occasionally found necessary to read conjunctions
�or� and �and� one for the other.�
The Hon�ble Supreme Court in a
case reported AIR 1957 SC p.699 State of Bombay vs. R.M.D. Chamarbougwala also
read the word �or� as �and� to give effect to the clear intention of the
legislature. In view of this, the Ministry of Law is of the view that to carry
out the intentions of the legislature, it is occasionally found necessary to
read the conjunction �or� and �and� one for the other. A Constitutional
Bench of the Hon�ble Supreme Court in a case reported in AIR 1963 SC p.1638
T.S. Govindlalji Maharaj vs. State of Rajasthan has also observed that sometimes
�or� must mean �and� as has been mentioned vide para 39 of the said
judgment. A copy of the Ministry of Law�s opinion is enclosed.
3. In view of the above, it is clarified that
penalty under section 114A of the Customs Act, 1962 should be equivalent to duty
and interest. The above-said clarification may kindly be kept in mind while
imposing the penalty under section 114A of the Customs Act, 1962.
4. The contents of the Circular may be brought
to the notice of all concerned by way of issuing suitable Standing Orders.
Kindly acknowledge receipt of the Circular.
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