2023 (12) TMI 193 - AT - Customs

Revenue's appeal dismissed as penalty reduction under Section 114 upheld for export misdeclaration case

CESTAT Allahabad dismissed revenue's appeal challenging penalty reduction under Section 114 of Customs Act. The case involved misdeclaration of export ... Quantum of penalty u/s 114 of CA - penalty imposed is around ten times the value of the impugned goods - misdeclaration of export goods - appellant in collusion with his DTA supplier (appellant-2) attempted to export the impugned goods which were liable for confiscation. It is contention of revenue that Commissioner (Appeals) has decided the appeal in favour of respondents without discussing departmental views on merits. HELD THAT:- The Commissioner (Appeals) has discussed the relevant portion of show cause notice and has concluded for deduction of the penalties imposed upon the respondents. He has discussed in his order that why he do not find respondents guilty of mis-declaration etc. and imposition of penalties under Section 114 and specifically under Section 114AA is a discretionary power whereby penalty could have been imposed up to the value as declared or to the value as determined under the Customs Act. It is not the case that penalties imposed under the provisions is a mandatory penalty that needs to be reduced. Commissioner (Appeals) in exercise of discretion have reduced the penalties imposed as indicated in his order. Nothing has been stated in the appeal to show that the discretion as exercised was in a malafide manner. In case of COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI VERSUS RA SPINNING MILLS (P) LTD. [2004 (4) TMI 405 - CESTAT, MUMBAI] Mumbai bench held Section 112 of the Customs Act does not provide for a mandatory penalty and the discretion to impose penalty or not to impose penalty depends upon each case. In COMMISSIONER OF CENTRAL EXCISE, CUS. & S.T. VERSUS BARNWAL CARPET MFG. CO. [2017 (11) TMI 1046 - ALLAHABAD HIGH COURT] Hon’ble Allahabad High Court has held When the adjudicating authority is empowered to impose lesser penalty than the maximum provided it cannot be said that the Tribunal is not vested with the same power. The Tribunal having exercised the above discretion for the reasons recorded which do not appear to be arbitrary or whimsical, in any way, we are of the view that the said discretion is not liable to be interfered with and the Tribunal was justified in reducing the penalty imposed under Section 114(iii) of ‘the Act’. There are no merits in the appeal - appeal dismissed. Issues Involved:1. Imposition of Penalty under Section 114(iii) of the Customs Act on Appellant-1.2. Imposition of Penalty under Section 114AA of the Customs Act on Appellant-1.3. Imposition of Penalty under Section 114(iii) of the Customs Act on Appellant-2.4. Imposition of Penalty under Section 114AA of the Customs Act on Appellant-2.Issue-wise Comprehensive Details:1. Imposition of Penalty under Section 114(iii) of the Customs Act on Appellant-1:The Commissioner (Appeals) found that the penalty of Rs. 60 lakhs imposed on Appellant-1 was excessive and harsh. It was noted that the mis-declaration of goods was due to a mistake by the laborers/supervisors and not a deliberate act by Appellant-1. The penalty was reduced to Rs. 3 lakhs considering the value of the goods and the absence of willful mis-declaration.2. Imposition of Penalty under Section 114AA of the Customs Act on Appellant-1:The Commissioner (Appeals) held that a penalty under Section 114AA could only be imposed if a person knowingly or intentionally made false declarations. It was found that there was no evidence to prove that Appellant-1 knowingly signed false documents. Therefore, the penalty of Rs. 30 lakhs imposed under Section 114AA was set aside.3. Imposition of Penalty under Section 114(iii) of the Customs Act on Appellant-2:The Commissioner (Appeals) concluded that Appellant-2, being only a supplier, did not attempt to export the goods and therefore could not be penalized under Section 114. The allegations of collusion between Appellant-1 and Appellant-2 were found to be unsubstantiated. Consequently, the penalty of Rs. 30 lakhs imposed on Appellant-2 was set aside.4. Imposition of Penalty under Section 114AA of the Customs Act on Appellant-2:It was determined that Section 114AA applies to natural persons and not to companies or legal entities. Since no evidence was provided to show that Appellant-2 committed any acts mentioned in Section 114AA, the penalty of Rs. 15 lakhs was set aside.Conclusion:The appeals filed by the revenue were dismissed. The Commissioner (Appeals) exercised discretion in reducing and setting aside penalties, and this exercise of discretion was not found to be arbitrary or whimsical. The Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing that the penalties under Sections 114 and 114AA are not mandatory and can be reduced based on the circumstances of each case.