01 March 2015

Budget 2015 – Penalty provisions relaxed in Excise and Customs

Finance Bill 2015 introduced in the Lok Sabha (Lower House of the Indian Parliament) today on 28-2-2015, has proposed certain relaxations in respect of penalty provisions under Central Excise and Customs Laws.

Section 28 of the Customs Act, 1962 is proposed to be amended to provide for non-imposition of penalty if the person to whom a show cause notice has been issued in relation to duty or interest, pays said duty and interest within 30 days of receipt of the notice. The new provisions, relevant in case of SCNs issued not invoking the extended period (i.e. within the normal period of limitation), in this regard make it clear that proceedings against such person shall be deemed to be concluded after payment of such duty and interest.  

Further, in respect of notices issued invoking extended period in cases of collusion, willful mis-statement or suppression of facts, penalty payable, after the enactment of the Finance Bill, would be 15% only if the duty along with interest is paid within 30 days of issuance of notice. Presently penalty equal to 25% of the duty specified in the notice or accepted by that person, is payable. Similar provisions are also proposed in Central Excise law and Section 11AC of the Central Excise Act, 1944 is being substituted for the purpose.    

In respect of penalty for improper importation of goods, provisions are being made to allow for payment of penalty not exceeding 10% of the duty where evasion is alleged by the Customs Department. This quantum of penalty would however be limited only in cases of dutiable goods, other than prohibited goods, not involving valuation issues. The new provisions also propose that if the duty and interest determined by the officer is paid within 30 days of the order determining such duty, penalty payable would be only 25% of the penalty so determined. Presently, penalty not exceeding the duty sought to be evaded on such goods, is payable. Similar provisions have also been proposed in respect of penalty for attempt to export goods improperly.


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