2023 (9) TMI 464 - AT - Customs

Tribunal overturns penalties for imported goods reclassification under Customs Act. No interest on differential duty.

The Tribunal set aside the confiscation, redemption fine, and penalty imposed on the assessee for the reclassification of imported goods under the Customs ... Demand of interest on differential duty - One Set of True Beam Linear Accelerator - Disputre were related to classification under CTH 90229030 or under 90221490? - wrongful availment of exemption under Customs Notification Nos. 021/2012 Sl.No. 473 and 021/2012 Sl.No. 95 - HELD THAT:- There is no contravention of provisions of Section 111 (m) of the Customs Act, 1962 as the assessee has declared all the details and the value of the imported goods in the Bill of Entry filed. As such, the confiscation of the imported goods is not justified, and so, set aside. Consequently, the fine imposed is also ordered to be set aside. Regarding Department’s appeal for not confirming the demand of interest under Section 47 (2) of the Customs Act, 1962, the lower adjudicating authority has not given any reasons for such waiver. The only reason that can be inferred is that the imports of the goods were cleared under Zero Duty EPCG Scheme. The assessee has also referred to the decision of the Hon’ble Apex Court in the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA [1996 (10) TMI 88 - SUPREME COURT] wherein it was held that when goods at the time of removal from warehouse are wholly exempted from payment of duty the liability to pay interest is solely dependent upon the exigibility or actual liability to pay duty. Though the above decision was rendered on the issue of demand of interest in respect of warehouse goods, same analogy can be drawn to resolve the issue in the present appeal as the assessee has not paid any duty on clearance of the impugned equipment - the fact is also noted that DGFT authority has permitted amendment of the EPCG authorisation issued providing for debit of differential duty demanded. As such, the interest is not demandable. So, the appeal filed by the Revenue is rejected. The confiscation of impugned goods is not justified and so redemption fine and penalty imposed are set aside. The appeal of the assessee is allowed and the Revenue’s appeal on demand of interest on the differential duty arisen due to revision of classification is rejected. Issues Involved:1. Whether the imported goods are liable for confiscation due to revision of classification resulting in demand of differential duty.2. Whether the penalty imposed is justified in the facts and circumstances of this case.3. Whether interest is demandable on the differential duty confirmed in terms of provisions of Section 47 of the Customs Act, 1962.Summary:Issue 1: Confiscation of Imported GoodsThe assessee imported Radiotherapy Apparatus, viz., 'Linear Accelerator - True Beam STX with Accessories' under zero duty EPCG Scheme, classifying them under CTH 90229030 to avail exemption under Customs Notification Nos. 021/2012 Sl.No. 473 and 021/2012 Sl.No. 95. The Department reclassified the goods under CTH 90221490, resulting in a differential duty amount of Rs.1,61,33,342/-. The lower adjudicating authority held the goods liable for confiscation under Section 111(m) of the Customs Act, 1962, and imposed a redemption fine of Rs.10,00,000/-. However, the Tribunal noted that the assessee had declared all details and values correctly and that the classification issue was interpretational without any mens rea. The Tribunal referred to judicial decisions, including Northern Plastic Ltd. vs. Commissioner of Customs, to conclude that the confiscation was not justified and set aside the order of confiscation and the redemption fine.Issue 2: Justification of PenaltyThe lower adjudicating authority imposed a penalty of Rs.10,00,000/- on the assessee under Section 112(a) of the Customs Act, 1962. The Tribunal, however, held that the wrong classification was a bona fide belief and not a deliberate action to evade duty. The Tribunal cited decisions such as Aureole Inspecs India Pvt. Ltd. vs. Commissioner of Customs and Lewtek Altair Shipping Pvt. Ltd. vs. Commissioner of Customs to support that a wrong classification claim does not make the goods liable to confiscation or penalty. Consequently, the penalty imposed was set aside.Issue 3: Demand of Interest on Differential DutyThe Department appealed against the waiver of interest on the differential duty. The Tribunal noted that the lower adjudicating authority did not provide reasons for waiving the interest. The Tribunal referred to the Supreme Court decision in Pratibha Processors vs. Union of India, which held that when goods are wholly exempted from duty at the time of removal, the liability to pay interest is also nil. Since the assessee cleared the goods under Zero Duty EPCG Scheme and the DGFT had permitted the amendment of the EPCG authorization for debiting the differential duty, the Tribunal held that interest was not demandable and rejected the Revenue's appeal.Conclusion:The Tribunal allowed the assessee's appeal, setting aside the confiscation, redemption fine, and penalty. The Revenue's appeal on the demand of interest was rejected. The order was pronounced in open court on 05.09.2023.