2011 (3) TMI 1192 - AT - Customs

Customs Tribunal Decision: Duty upheld, interest set aside. Penalties adjusted based on representation. Confiscation upheld, redemption fine set aside.

The Tribunal upheld the demand of duty in both the Mumbai and Chennai cases but set aside the demand for interest under Section 28AB of the Customs Act. ... Breach of Notification No. 80/95-Cus dated 31.3.95 - Demand of custom duty, interest and penalties - invoking extended period - as per dept. assessee willfully suppressed the factum of non-utilization of the duty-free goods with mala fide intention to evade duty of Customs - Held that:- Where the taxable event is 'import', the tax has to be paid by the importer. Therefore, the importer is the person chargeable with the duty on the goods imported and presented under the Bill of Entry. Accordingly, to hold that the liability to pay duty, in the present case, is on the appellant. It is not in dispute that the bank guarantee was encashed by the department way back in 1997. There is nothing on record to show that it was encashed at the instance of the appellant. As rightly submitted by the learned SDR, the encashment of bank guarantee cannot be deemed to be a voluntary payment of duty by the appellant. Therefore, the appellant cannot claim immunity from penalty or fine on the alleged ground of payment of duty prior to issuance of show-cause notices. As rightly pointed out by the learned SDR, breach of condition (v) of Notification No. 80/95-Cus by the appellant attracted Section 111 (o) of the Customs Act and, consequently, the goods imported by him were liable to confiscation. The goods were, no doubt, not physically available for confiscation as they had been cleared duty-free and diverted long back. However, it is not in dispute that the clearance of the goods at Customs was allowed against bond and bank guarantee. That being so, the non-availability of the goods would not stand in the way of the adjudicating authority imposing redemption fine under Section 125 of the Act. The appellant, as importer, cannot claim immunity from penalty after having cleared the goods duty-free under the exemption notification and diverted the same in gross breach of a condition thereof. The appellant, by his conduct, rendered the goods liable to confiscation and rendered himself liable to penalty. Hence the penalty imposed on 'M/s Global Art' under Section 112 of the Act in the Chennai case is, therefore, liable to be sustained in principle. Given the assessable value of the goods to be approximately at Rs 30 lakhs, we reduce the penalty to Rs 1,00,000/- . The penalty imposed on Mr. Bimal Kumar Mehra in the Chennai case is set aside. In the Mumbai case the penalty on Mr. Bimal Kumar Mehra is not liable to be vacated though it calls for reduction, in the circumstances of the case, to Rs 10,000/-. Breach of conditions of the notification made the appellant liable to pay the duty with interest in terms of the bond. Therefore, the demand of interest on duty confirmed against the appellant, in the Chennai case, has to be upheld and it is ordered accordingly. Issues Involved:1. Jurisdictional Objection2. Demand of Duty and Interest3. Imposition of Penalties4. Confiscation and Redemption Fine5. Applicability of Section 114A and Section 28AB of the Customs ActIssue-wise Detailed Analysis:1. Jurisdictional Objection:The appellant raised a jurisdictional objection, arguing that the Commissioner of Customs (Adjudication), Mumbai should have jointly adjudicated both show-cause notices as per Notification No. 93/98-Cus (NT) dated 16.11.98. The Tribunal overruled this objection, noting that it was not raised at the earliest stage of proceedings and was not included in the appellant's replies to the show-cause notices or in the present appeals.2. Demand of Duty and Interest:The appellant contended that the duty was effectively paid when the bank guarantee was encashed in March 1997, implying no further duty, fine, or penalty should be levied. The Tribunal rejected this argument, stating that encashment of the bank guarantee was not voluntary payment of duty by the appellant. The Tribunal upheld the demand of duty in both the Mumbai and Chennai cases but set aside the demand for interest under Section 28AB of the Customs Act, as it was not in force at the time of import.3. Imposition of Penalties:The penalties imposed under Section 112 and Section 114A were contested. The Tribunal found that separate penalties on 'M/s Global Art' and Mr. Bimal Kumar Mehra in the Chennai case were not permissible as they represented the same entity. The penalty on 'M/s Global Art' under Section 112 in the Chennai case was reduced to Rs 1,00,000, and the penalty on Mr. Bimal Kumar Mehra was set aside. In the Mumbai case, the penalty under Section 114A was set aside, and the penalty on Mr. Bimal Kumar Mehra under Section 112 was reduced to Rs 10,000.4. Confiscation and Redemption Fine:The Tribunal upheld the confiscation of goods under Section 111(o) due to the breach of conditions of Notification No. 80/95-Cus. However, since the goods were not available for confiscation, the redemption fine imposed in the Chennai case was set aside. The Tribunal noted that the non-availability of goods would not prevent the imposition of redemption fine, supported by the Supreme Court's judgment in Weston Components Ltd vs Commissioner.5. Applicability of Section 114A and Section 28AB of the Customs Act:The Tribunal agreed with the appellant that Section 114A and Section 28AB, which came into force on 28.09.1996, were not applicable to imports made before this date. Consequently, the penalties under Section 114A and the interest under Section 28AB were set aside.Conclusion:The appeals were disposed of with the following orders:- Mumbai Case (Appeal No C/1279/01):- Demand of duty upheld.- Goods held liable to confiscation.- Penalty under Section 114A set aside.- Penalty under Section 112 reduced to Rs 10,000.- Chennai Case (Appeal No. C/84/03):- Demand of duty with interest upheld.- Goods held liable to confiscation, but redemption fine set aside.- Penalty under Section 112 reduced to Rs 1,00,000.- Penalty on Mr. Bimal Kumar Mehra under Section 112 set aside.