2015 (5) TMI 942 - AT - Customs

Imposition of penalty - Non furnishment of documents - Change in penalty section from section 117 to Regulation 5 of the Customs Regulations 2011 - Held that - There is no mala fide intention on the part of the importer to evade any duty and was following a practice. Appellant in reply to the show cause notices asked for extension of time which the Adjudicating Authority should have allowed - Adjudicating authority imposed penalties under Section 117 of the Customs Act 1962 by penalties so imposed were held to be imposable only under Regulation 5 of the Customs (Provisional Duty Assessment) Regulations 2011. This was not the subject matter of the show cause notices. Therefore, above findings arrived at by the First Appellate Authority are required to be rejected, as he cannot go beyond the scope of show cause notices when the same is not agitated by the Revenue. - Decided in favour of assessee.

Summary

Issues:
Appeal against imposition of penalty under Regulation 5 of Customs Regulations 2011 instead of Section 117 of Customs Act 1962.

Analysis:
The appeals were filed challenging the imposition of penalties under Regulation 5 of the Customs (Provisional Duty Assessment) Regulations 2011 instead of Section 117 of the Customs Act 1962. The First Appellate Authority reduced the penalties but held that penalties should be imposed under Regulation 5. The appellant argued that penalties cannot be imposed under Regulation 5 once show cause notices proposing penalties under Section 117 have been issued. The appellant also highlighted the practice in the Customs House regarding late filing of documents for imports of Crude Oil and requested an extension of time for submitting documents as per Customs Regulations 2011.

The Authorized Representative for the Revenue contended that the penalties were correctly imposed under Regulation 5 as the offence remained the same whether under Section 117 or Regulation 5. It was argued that the appellant should have sought an extension of time for filing documents as they had been requesting provisional assessment. The Adjudicating Authority upheld the penalties under Regulation 5.

Upon reviewing the case records, it was noted that the appellant imported Crude Oil with provisional assessments subject to producing certain documents within 30 days. The appellant explained that due to the nature of the documents, they were unable to produce them within the stipulated time. The appellant requested an extension of time for filing documents, as per the prevailing practice in the Customs House. The Customs Regulations 2011 required a bond for provisional assessment, with no explicit mention of an application for extension. The Adjudicating Authority should have extended the period as requested by the appellant in their reply to the show cause notice.

The appellant cited precedents to support their argument that penalties should not be imposed without evidence of mala fide intention. The Tribunal observed that there was no mala fide intention on the part of the importer and that an extension of time should have been granted by the Adjudicating Authority. The penalties imposed under Section 117 were found to be imposable only under Regulation 5, which was not the subject matter of the show cause notices. As the Revenue did not appeal against the First Appellate Authority's orders, the findings regarding penalties under Regulation 5 were required to be rejected. Consequently, the appeals filed by the appellants were allowed with any consequential relief.

In conclusion, the judgment addressed the issue of penalty imposition under Regulation 5 of Customs Regulations 2011 instead of Section 117 of Customs Act 1962. The Tribunal found in favor of the appellants, emphasizing the need for proper application of penalties in accordance with the relevant provisions and practices.