2025 (8) TMI 266 - AT - Customs

Importer Penalized for Willful Suppression Under Sections 114A and 112(a) of CA, 1962 Confirmed on Appeal

The CESTAT Chennai upheld the finding of willful suppression of facts by the importer, warranting the imposition of penalty under Section 114A of the CA, ... Failure to impose penalty u/s 114A of CA, 1962 in addition to penalty under Section 112(a) - determination of liability u/s 28 - wilful suppression of facts - HELD THAT:- An identical issue was considered by the other Bench and after hearing the Bench has passed an order holding that there was willful suppression of facts on the part of the importer which warranted the levy of rent under Section 114A of the Act. Appeal disposed off. ISSUES: Whether penalty under Section 114A of the Customs Act, 1962 is mandatorily leviable in addition to penalty under Section 112(a) when duty demand is confirmed under Section 28(8) due to willful suppression of facts.Whether the Adjudicating Authority was correct in not imposing penalty under Section 114A despite confirming duty demand and penalty under Section 112(a). RULINGS / HOLDINGS: The penalty under Section 114A is a statutory penalty that is 'shall also be liable to pay a penalty equal to the duty or interest so determined' and is automatic upon finding willful mis-statement or suppression of facts leading to duty short-levy or non-levy.The Adjudicating Authority erred in not imposing penalty under Section 114A since the duty demand was confirmed under Section 28(8) on account of willful suppression of facts; therefore, penalty under Section 114A is mandatorily leviable and non-discretionary.The appeal by the Revenue succeeds in modifying the impugned order to impose penalty under Section 114A equal to the duty or interest determined. RATIONALE: The Court applied the statutory framework of Section 114A of the Customs Act, 1962, which prescribes penalty for short-levy or non-levy of duty arising from collusion or willful mis-statement or suppression of facts, with penalty equal to the duty or interest determined under Section 28(8).The Court relied on Supreme Court precedents including UOI vs Rajasthan Spinning and Weaving Mills and UOI vs Dharmendra Textile Processors, which held that when a statute uses the term 'shall be leviable,' the penalty is mandatory and the adjudicating authority has no discretion regarding quantum or imposition.The Court emphasized that the purpose of Section 114A penalty is deterrence against blameworthy conduct to prevent dishonest advantage or unjust gain.The Court noted that no penalty under Section 112 or Section 114 shall be levied if penalty under Section 114A is levied, confirming the mutually exclusive nature of these penalties.