AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 1553
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..... 26.08.2015 was issued to the appellant proposing to demand differential duty of Rs. 4,81,74,877/- along with interest. The notice also proposed to confiscate the goods under Section 111 (m) and impose penalty under Section 112 and 114A of Customs Act. The notice alleged that the appellant had undertaken the activities of loading of software application and repacking of the goods in cartons which amounted to 'manufacture' as defined under section 2f (i) and Section 2f (iii) read with Sl.No. 74A of the Third Schedule to the Central Excise Tariff Act, 1944. The show notice also observed that the goods ought to have been assessed on ad valorem on the transaction value. After due process of law, the original authority confirmed the proposals in the SCN including the proposal for confiscation, demand of interest and imposition of redemption fine and penalties. 2. Aggrieved by such order, the appellant is now before the Tribunal. 3. The learned counsel Sri Rohan Muralidharan appeared and argued for the appellant. 3.1 It is submitted by the learned counsel that the appellant is a private limited company engaged, inter alia, in the import and trading of laptops, personal computers, pro....
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....5512 laptops meant for supplying to M/s. Rajcom were imported for an invoice value of USD 277.48 Rs. 16,427/-) per piece and that the MRP declared i.e. Rs. 14,999/- was inclusive of VAT. On 08.07.2013 the appellant again requested for provisional release. 3.4 On 10.07.2013 the Commissioner of Customs (Import) permitted provisional release of the laptops on execution of bank guarantee for an amount of Rs. 1,51,47,000/- being the differential duty between the transaction value and MRP of the 25,512 laptops. Intimation was served by appellant to the Superintendent of Central Excise, Pondicherry vide letter dt. 10.07.2013 regarding the provisional release of the laptops and their intention to bring the same to appellant's factory at Puducherry for loading of software and that the laptops would be cleared after payment of excise duty. It was also stated that appellant would be availing CENVAT credit of the duty paid. 3.5 On 12.07.2013, statement of Sri B.K. Prakash was recorded wherein, inter alia, he stated that due to time constraint in view of detention of the goods by the Customs and to ensure the timely delivery, the laptops were being planned to be supplied by loading the softwa....
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....that sales department is given the final bidding price inclusive of all cost structures for the tender, that the price quoted by them for 36,750 laptops was Rs. 20,126/- whereas the order price was Rs. 19,899 inclusive of all prices. 3.12 On 08.07.2014 Sri Sudhir Goel, Chief Officer, Customer Support deposed that for supply of laptops to Rajcomp, the software in the nature of MS Visio and Adobe were bought locally from authorized reseller. The software were then loaded in the laptops at their warehouse. 3.13 On 15.07.2014 Sri Vee. Ramesh, DGM-Floor Operations, M/s. Uniworld Logistics Sriperumbudur, stated that they provide third party logistics to various customers including the appellant; that he was not aware whether any application software has been loaded into laptops meant for Rajcom at their warehouse. 3.14 On 21.07.2014, Sri Chhatrapal Singh, Manager of Rajcomp stated that the software such as MS-Visio, Adobe Acrobat and MS office are preloaded in the laptops supplied to Rajcomp. 3.15 On 20.08.2014, Sri Alok Dubey stated that a small quantity of laptops meant for supply to Rajcomp was loaded with software at their warehouse before inspection was carried out. 3.16 On 16.....
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....962 (52 of 1962), and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties, shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." 7. The Ld. Counsel argued that on a reading of the above provision, it is clear that Section 3 of CTA which levies duties other than Basic Customs Duty borrows the procedural provisions of Customs Act, however, the substantive provisions relating to penalty, confiscation, fine and interest has not been explicitly borrowed. The question that then arises is whether confiscation, redemption fine and penalty can be imposed on an assessee in the absence of substantive provisions in the statute creating or imposing such liability. 8. It is submitted by the counsel that as per sub-section (8) of Section 3 of the Customs Tariff Act as reproduced above, there is no mention that the provisions of the Customs Act would apply for recovery of interest on CVD, SAD and also for confiscation, imposition of redemption fine and penalties. Sub-section (8) of Section 3 merely states that the provisions of Customs Act and the R....
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....roposing to demand the duty, interest, for confiscation and for imposing penalties. The appellant has declared the RSP on the goods under bonafide belief that the goods are liable to be affixed with M.R.P stickers and to be assessed under Section 4A of C.E. Act, 1944. This is evident from the statement given by Sri B.K. Prakash on 25.09.2013. Further, the valuation of the goods is an interpretational issue. The Bills of Entry were filed by declaring RSP when the goods were assessed to CVD on the RSP so declared. There is nothing brought out from the conduct of the appellant that there is an intention to evade Customs duty. For this reason, the penalty under section 114A is not imposable. All the facts in the present case were well within the knowledge of the department and therefore there is no suppression or misstatement of facts. The classification adopted by the appellant was under heading 8471 and the transaction value and RSP of the imported laptops were declared in the Bills of Entry. Thus, if the department was of the view that the goods are not liable for RSP based assessment, they ought to have raised the objection at the time of import itself. After having accepted the se....
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.... serious violations on the part of the appellant and the same would not have come to light but for the investigation conducted by the SIIB officers. It is very much clear that there has been delay in payment of excise duty. So also, the appellant has paid the CVD on transaction value and 4% SAD also with delay. Therefore, the interest paid on such delayed payment of CVD and SAD is legal and proper. As there have been serious violations on the part of the appellant, the adjudicating authority has ordered for confiscation of the goods. The appellant was given an option to redeem the same on payment of redemption fine. As the appellant has rendered the goods liable for confiscation there are no grounds to set aside the imposition of redemption fine. Consequently, the redemption fine imposed is legal and proper and the same has to be paid by the appellant. 17. The argument put forward by the learned counsel relying upon the decision in the case of Mahindra & Mahindra Ltd. (supra) was countered by the Ld. A.R by submitting that sub-section (8) of Section 3 of the Customs Tariff Act, 1975 uses the word "including". The same has to be read to have wide ambit so as to include confiscation....
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....on 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso" The SCN alleges that the appellant cleared laptops covered under 13 Bills of Entry by willfully assessing the goods under Section 4A of Central Excise Act, 1944 instead of Section 4, in order to avoid payment of higher duty and thus evaded duty to the tune of Rs. 4,81,74,877/-. The Ld. Counsel has submitted that the appellant is not contesting the classification, valuation or the confirmation of differential duty of Rs. 4,81,74,877/- (The amount of Rs. 3,31,02,277/- being CVD and Rs. 1,50,72,600/- being 4% Special Additional Duty (SAD) paid by them). The contest in the present appeal is limited to the d....
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....he value of the imported article as specified in that notification." Subsection (8) of Section 3 of CTA provides for the machinery of collection of the said duties. It borrows the provisions of the Customs Act, for collection, payment and recovery of the CVD and SAD. 21. The impugned order confirms an amount of Rs. 4,81,74,877/- as differential duty of CVD and SAD when calculated on transaction value. The order has also confirmed the demand of interest on the above duty under Section 28AA of the Customs Act, 1962. It is now argued by the learned counsel that the demand of interest on Additional Duty of Customs (CVD) and SAD cannot sustain as there is no substantive provision for levy of interest on delayed payment of CVD or SAD in sub-section (8) of section 3 of Customs Tariff Act, 1975. 22. The very same argument has been put forward by the Ld. Counsel in regard to the order of confiscation of goods and imposition of redemption fine of Rs. 1,50,00,000/- and regarding the penalty of Rs. 5,85,04,608/- as imposed under Section 114A. 23. Ld. Counsel has vehemently argued that when there is no substantive provision for levy of interest on belated payment of CVD and SAD, the demand ....
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....ty or power to determine the terms of settlement covering not only the amount of duty but also interest and penalty; and (d) under Section 127H of the Customs Act, 1962, respondent No. 2 has the power to grant immunity from prosecution and penalty subject to such conditions as it may think fit to impose. Such a power has been exercised by the Commission in imposing penalty and interest upon petitioner and, therefore, respondent No. 2 cannot be faulted. Mr. Mishra submitted that there is nothing in the order to be concerned that the legality of procedure was not followed. Since there is nothing wrong with the validity of the order, the Court should not interfere and should dismiss the petition. 13. Therefore, the issue that requires to be decided by this Court in this petition is limited to leviability of interest and penalty in relation to amounts payable as duty other than basic customs duty. 14. Having considered the judgment of the Apex Court in Jyotendrasinhji (Supra), the law is very clear that though the order of the Commission is in the nature of a package deal and it may not be possible always, to dissect its order and the assessee should not be permitted to accept wh....
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....No.2) Act, 2004 amended sub-section (8) of Section 9A suitably to include interest and penalty. However, similar amendments have not been made to Section 3(6) of the Customs Tariff Act, 1975 relating to CVD, i.e., additional duty equal to excise duty or Section 3A(4) of Customs Tariff Act, 1975 relating to SAD, i.e., special additional duty or surcharge under Section 9(3) of the Finance Act, 2000. 35. Further, Section 12 of the Customs Act, 1962 levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, 1975. In Customs Tariff Act, 1975, Section 2 provides the rates at which duties of customs are to be levied under the Customs Act, 1962 are as specified in the first and second schedules of the Customs Tariff Act, 1975. In Section 12 of the Customs Act, 1962 there is no reference to any specific provision of Customs Tariff Act, 1975. On the other hand levy of CVD or SAD under Section 3 or Section 3A of the Customs Tariff Act, 1975 or surcharge under Section 90 of the Finance Act, 2000 is not relatable to the first or second schedule but the rate is prescribed in those three sections itself. This itself shows the charging section for surch....
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....ction 3 (1) of the Customs Tariff Act; (c) additional duty levied on raw- materials, components and ingredients under Section 3 (3) of the Customs Tariff Act; and (d) duty chargeable under Section 9A of the Customs Tariff Act, 1975. Customs Act 1962 and the Customs Tariff Act, 1975 are two separate independent statutes. Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. 37. In view of the above, imposing interest and penalty on the portion of demand pertaining to surcharge or additional duty of customs or special additional duty of customs is incorrect and without jurisdiction. 38. We have to note that in the present case, it is not disputed that petitioner has paid a sum of Rs. 11.84 Crores much prior to the issuance of show cause notice. There is no determination of duty under Section 28(2) of the Customs Act, 1962 and, therefore, Section 28AB of the Customs Act, 1962 is also not applicable. Petitioner has also paid the differe....
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.... the Registry of this Court within four weeks of receiving an application." 25. The above judgment of the Hon'ble High Court was affirmed by the Hon'ble Apex Court in UOI Vs Mahindra & Mahindra Ltd. - 2023 (8) TMI 135 (SC.). Applying the ratio laid in the above judgment, we are of the considered view that the demand of interest (on the total differential duty of Rs. 4,81,74,877/-) cannot sustain and requires to be set aside. For the same reason, the confiscation of the goods and the imposition of redemption fine are set aside. 26. The penalty of Rs. 5,85,04,608/- has been imposed under Section 114A of the Customs Act, 1962. The said section reads as under : "SECTION 114A. Penalty for short-levy or non-levy of duty in certain cases. - Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall also be liable to pay a penalty equal to the duty or interest so ....
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....er of the assessee's manufactured goods; (d) We express our opinion in favour of the view taken in the case of M/s. International Auto Products (P) Ltd. (supra) and endorse the proposition that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty." 27. The Tribunal in the case of United Distributors Vs CCE Thane-I - 2014 (30) ELT 571 (Tri.-Mum.) observed as under : "8. We find that in this case, the show cause notice issued to the appellant on the issue whether the activity of labelling/re-labelling or putting stickers on the imported goods amounts to manufacture or not. In the case of L'Oreal India Pvt. Ltd. (supra) we find that this Tribunal has observed that as the activity of fixing MRP stickers took place in Customs bonded warehouse therefore, the same does not amount to manufacture but in this case the MRP stickers have been fixed after clearance of the goods from the Customs. Therefore, as per Chapter note and Section 2(f)(iii) of the Central Excise Act, 1944, the activity undertaken by the appellant amounts to manufacture. In these circumstances, we hold that the activity undertaken by the appellant is amounts to manufacture. ....