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of <h1>CESTAT sets aside section 114A penalty for classification dispute, rules no willful mis-declaration involved</h1> <h3>FAIVELEY TRANSPORT RAIL TECHNOLOGIES INDIA PRIVATE LIMITED Versus PRINCIPAL COMMISSIONER OF CUSTOMS-NEW DELHI ACC IMPORT</h3> FAIVELEY TRANSPORT RAIL TECHNOLOGIES INDIA PRIVATE LIMITED Versus PRINCIPAL COMMISSIONER OF CUSTOMS-NEW DELHI ACC IMPORT - TMI ISSUES: Whether a show cause notice (SCN) under section 28(1) and penalty under section 114A of the Customs Act, 1962 can be issued when the importer has paid differential duty and interest after re-classification of goods during investigation.Whether classification of imported goods by the importer in the Bill of Entry is a matter of fact or a matter of opinion, and the legal consequences of any difference in classification with the investigating authority.Whether invocation of the extended period of limitation and imposition of penalty under section 114A is justified in the absence of collusion, willful mis-statement, or suppression of facts by the importer.Whether goods are liable for confiscation under section 111(l) of the Customs Act, 1962 on the basis of disputed classification.Whether the provisions of section 28(2) of the Customs Act, 1962 bar issuance of SCN and penalty once the differential duty and interest have been paid. RULINGS / HOLDINGS: Since the appellant paid the full differential duty and interest after agreeing to re-classification proposed by the investigating authority, issuance of SCN and imposition of penalty under section 114A was improper; 'the proper officer shall not serve any notice' under section 28(2) once duty and interest are paid.Classification of goods in the Bill of Entry is a matter of opinion and not a matter of fact; an importer fulfilling its obligation by declaring classification according to its bona fide understanding does not amount to mis-declaration.Extended period of limitation and penalty under section 114A cannot be invoked absent any evidence of collusion, willful mis-statement, or suppression of facts; mere difference in classification does not justify penalty.The goods are not liable for confiscation under section 111(l) merely due to disputed classification when there is no intent to evade duty.Section 28(2) precludes issuance of any notice or penalty once duty and interest are paid unless there is collusion or willful mis-statement; hence, the SCN and penalty are set aside, but refund of duty or interest is not allowed. RATIONALE: The Court applied the statutory framework of the Customs Act, 1962, particularly sections 17, 28, 46, 111(l), and 114A, along with the definition of 'assessment' under section 2(2), emphasizing the importer's obligation to make a truthful declaration in the Bill of Entry.Section 28(2) was interpreted to bar issuance of SCN and penalty once the duty and interest are paid voluntarily and there is no collusion or willful mis-statement, reflecting a safeguard for bona fide importers.The Court relied on the principle that classification is a matter of opinion subject to judicial review and administrative reassessment, not a strict factual declaration, thus protecting an importer's bona fide classification choice.The Supreme Court precedent applying the principal/sole use test for classification under Chapter 86 was noted to support the appellant's initial classification, underscoring the interpretative nature of tariff classification disputes.The decision reflects a doctrinal affirmation that penalty under section 114A requires willful evasion or suppression, and mere disagreement on classification without such intent does not attract penalty.
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