2018 (12) TMI 1837 - AT - Customs

Validity of SCN - Quantum of penalty - Valuation of imported goods - Fitness/Health Equipments - rejection of declared value - under-invoicing of imports - confiscation - Whether the order of the adjudicating authority insofar as it relates to imposition of lesser penalty than mandatorily prescribed under Section 114A of the Customs Act, 1962, is legal and proper? - HELD THAT - In this appeal, Revenue has not assailed the impugned order on the ground that quantum of penalty imposed under Section 112(a) (b) ibid is not corresponding to the gravity of offence. Rather, prayer has been made that mandatory penalty prescribed under Section 114A ibid should not be at a lesser side. Since, the issue involved in the case relates to confiscation of goods and related contravention of the statutory provisions, Section 114A ibid cannot at all be invoked. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Customs duty evasion through under-invoicing
2. Confiscation of goods
3. Penalty imposition under Customs Act
4. Determination of penalty amount under Section 114A
5. Proper invocation of statutory provisions

Analysis:
1. The case involved allegations of customs duty evasion through under-invoicing by two firms importing fitness/health equipment. Investigations revealed discrepancies in declared values, leading to a show cause notice issued to the firms for rejection of declared value, confiscation of goods, recovery of short-paid duty, and imposition of penalties under the Customs Act.

2. The impugned order confirmed the demands proposed in the show cause notice, holding the main individual behind the manipulations liable for penalties under Section 114A of the Customs Act. However, a lesser penalty than mandated under Section 114A was imposed, raising a question of law regarding the adequacy of the penalty.

3. The Tribunal examined the case records and noted that the show cause notice invoked Section 124 of the Customs Act for rejecting and redetermining declared values. Since duty liability was not finalized at the initiation of proceedings, Section 28 for duty recovery and Section 114A for penalty imposition could not be invoked without a determination of liability.

4. The Tribunal emphasized that the show cause notice under Section 124 aimed at confiscating goods, not determining duty liability. The order correctly imposed penalties under Section 112(a) & (b) for contraventions related to confiscation of goods, in line with statutory requirements.

5. The Revenue's appeal contested the penalty amount under Section 112(a) & (b), seeking the mandatory penalty prescribed under Section 114A. However, as the case primarily dealt with confiscation of goods and statutory contraventions, Section 114A was deemed inapplicable, leading to the dismissal of the Revenue's appeal due to lack of substance.

6. Ultimately, the Tribunal found no infirmity in the impugned order passed by the Learned Commissioner of Central Excise, dismissing the Revenue's appeal based on the proper invocation of statutory provisions and the absence of grounds for challenging the penalty amount imposed under Section 112(a) & (b).