2017 (8) TMI 1520 - AT - Customs

Imposition of Penalty u/s 114A of CA, 1962 - case of appellant is that imposition of penalty is not proper and justified inasmuch as Section 28 ibid has not been invoked for confirmation of the duty demand - whether, in absence of determination of the duty liability by the proper officer, which was not levied or short-levied by reason of wilful misstatement or suppression of fact etc., can the provisions of Section 114A ibid be invoked for imposition of penalty? Held that - As per section 114A, imposition of penalty is subject to the condition that there must be determination of the duty liability under Section 28 ibid by the proper officer, which according to him, has been short-levied or non-levied, owing to the reason of suppression, etc. - In this case, it is an admitted fact on record that the original authority has not determined the duty liability on account of short-levy or non-levy of duty in terms of Section 28 ibid. Rather, in terms of non-fulfilment of the conditions of the bond executed by the appellant, the penalty has been imposed under Section 114A ibid - Since there is no adjudication or determination of duty in terms of Section 28 by the proper officer, as per the mandates of Section 114A ibid, no penalty can be imposed on the appellant. Penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Section 114A of the Customs Act, 1962 without invoking Section 28 for confirmation of duty demand.

Analysis:
The appellant did not contest the demand confirmed against it for non-fulfillment of notification conditions and bond requirements but challenged the imposition of penalty under Section 114A without invoking Section 28 for duty demand confirmation. The appellant argued that since Section 28 was not invoked in the adjudication order, penalty under Section 114A was unjustified. The advocate emphasized that without fulfilling Section 28 requirements, Section 114A penalty cannot be imposed.

The Revenue, represented by the DR, supported the impugned order's findings, stating that non-fulfillment of bond conditions allows for duty recovery and penal consequences. The Tribunal considered whether, in the absence of duty liability determination under Section 28 due to willful misstatement or suppression, Section 114A penalty could be imposed. The Tribunal analyzed Section 114A, highlighting that penalty imposition is contingent upon duty liability determination under Section 28 due to suppression or misstatement. Since the original authority did not determine duty liability under Section 28 but imposed penalty based on bond non-fulfillment, the Tribunal concluded that no penalty could be imposed on the appellant.

In conclusion, the Tribunal found no merit in the impugned order's penalty imposition, as Section 28 requirements were not fulfilled. Consequently, the penalty imposition was set aside, and the appeal was allowed in favor of the appellant.