2013 (12) TMI 293 - AT - Customs

Imposition of penalty u/s 114A - Confiscation of goods - Notification No.21/2002 dt. 1/3/2002 - Commssioner reduced penalty - Held that - respondents had wrongly claimed the exemption available to software as there was no software separately imported and cleared. The impugned software formed part of the hardware and was liable to duty as hardware. The impugned goods were liable to confiscation under Section 111 (m) of the Act and appropriate fine could be validly imposed. The original authority had imposed penalty equal to the duty found to have been evaded under Section 114A of the Act. Commissioner (Appeals) reduced the fine from Rs. 1,35,000/- to Rs. 75,000/- considering the various submissions made by the respondents. They had submitted that the value of the offending goods was Rs. 2,90,000/- and that the original authority had taken into account the entire value of the two consignments covered by the Bills of Entry which was Rs. 5,43,170/-. I find that even considering the value of the entire goods imported, the fine of Rs. 75,000/- imposed by the Commissioner (Appeals) is reasonable. The authorities have not shown that the offending goods would have fetched a profit of Rs. 1,35,000/- were the goods sold in the market - Following decision of CC, Bangalore Vs. Protocol Solutions Pvt. Ltd. 2009 (11) TMI 449 - CESTAT, BANGALORE - Decided partly in favour of Revenue.

Summary

Issues:
Reduction of fine and penalty by the appellate Commissioner, Challenge by the Department, Comparison with a previous order involving a fellow-importer, Validity of reduction of penalty, Reasonableness of the fine imposed.

Analysis:
The judgment pertains to an appeal filed by the Department against the appellate Commissioner's decision to reduce the fine and penalty imposed on the respondent. The original authority had imposed a fine and penalty on the respondent for splitting hardware and software values to claim customs benefits. The Commissioner (Appeals) reduced the fine and penalty, prompting the Department's challenge. The Deputy Commissioner (AR) argued for restoration of the original fine and penalty, citing grounds related to the case. The respondent's counsel supported the appellate Commissioner's decision. The Tribunal noted that the reduction of fine and penalty was based on a previous order involving a fellow-importer, where similar grounds were considered. The Tribunal referenced a Final Order related to the previous case, highlighting the rejection of the Revenue's plea to enhance the fine and acceptance of the challenge against the penalty reduction. The Tribunal found that the respondent's conduct was similar to the fellow-importer, leading to the maintenance of the reduced fine but an increase in the penalty to the original level.

The Tribunal emphasized that the software was not separately imported and was part of the hardware, making it liable for duty as hardware. The goods were deemed liable for confiscation under Section 111(m) of the Customs Act, justifying the imposition of a fine. The penalty imposed was equal to the evaded duty under Section 114A of the Act. The Tribunal disagreed with the Commissioner (Appeals) reducing the penalty, stating that it was an error. However, regarding the fine, the Tribunal found the reduced amount reasonable based on the value of the goods imported and dismissed the Revenue's appeal against it.

In conclusion, the Tribunal partially allowed the appeal by maintaining the redemption fine set by the Commissioner (Appeals) but increasing the penalty to the original authority's level. The judgment highlighted the consistency in treatment between the present respondent and the fellow-importer, leading to the decision to uphold the fine reduction while adjusting the penalty. The cross-objections were also disposed of accordingly.