2016 (4) TMI 440 - AT - Customs

Demand of Interest - Section 28 of the Customs Act, 1962 - Import of IS 1000 fibre-optic endoscope surgical system classifying under Customs Tariff Heading 9018.90 and claimed benefit of concessional rate of duty @ 5% - Adjudicating Authority held mis-declaration of goods and denied benefit of exemption Notification - Held that - no interest under section 28AB ibid is recoverable because the demand has not raised/confirmed under Section 28 ibid, adding that even if the impugned order is taken to be issued in the context of finalisation of the provisional assessment under section 18 ibid no interest can be demanded as the provision for interest liability was introduced on 13.07.2006 wide insertion of section 18(3) while in the present case, the Bill of Entry was provisionally assessed on 28.10.2002 and that the interest cannot be demanded upon finalisation even if such finalisation was done after 13.07.2006. Imposition of penalty - Section 114A of the Customs Act, 1962 - Held that - the Show Cause Notice did not raise the demand in terms of Section 28 ibid. The wording of Section 114A ibid makes it expressely clear that penalty under that Section is attracted when liability to pay duty or interest is determined under Section 28 ibid. Thus, penalty under section 114A ibid is simply not attracted. Imposition of penalty - Section 112 of the Customs Act, 1962 - Held that - by following the judgment of Delhi High Court in the case of CC (I&G) Vs. Care Foundation 2014 (3) TMI 641 - DELHI HIGH COURT , the penalty imposed on appellant no. 2 should be reduced in the same ratio to ₹ 1 lakh. As regards penalty on Mr. Bhuvander Kaul, it is clearly brought out in the impugned order that he was the one looking after the import of the said equipment and that he was having knowledge of the mis-declaration and was a part of the entire plan to mis-declare the impugned goods. Thus, penalty on him is attracted. But in the given circumstances and having regard to the fact that penalty on M/s. J. Mitra & Bros, (who was also aware of the mis-declaration and was part of the plan to mis-declare the impugned goods) has been reduced by us from ₹ 5 lakhs to ₹ 1 lakh, the same principle has to be followed in the case of Mr. Bhuvander Kaul also. As regards the penalty on the CHA, (M/s Elecon Cargo Pvt. Ltd.), it filed a Bill of Entry on the basis of the documents made available to it by the importer and it had duly enclosed the supplier s invoice which described the goods as Endoscopic Intuitive IS 1000 da Vinci Surgical System . There is nothing on record to show that the CHA was deliberately trying to mislead Customs or was having any mala fide. The very fact that the relevant invoice was duly enclosed along with the Bill of Entry submitted to Customs is indicative enough that it was not the intention of the CHA in any way to hoodwink Customs. Thus, penalty on the CHA is not attracted. - Matter disposed of

Issues Involved:
1. Correct description of imported goods.
2. Final assessment of customs duty and denial of concessional rate.
3. Recovery of differential duty and interest.
4. Confiscation of goods for mis-declaration.
5. Imposition of penalties on various parties involved.

Detailed Analysis:

1. Correct Description of Imported Goods:
The Commissioner determined that the goods imported under Bill of Entry No. 389879 dated 28.10.2002 should be described as "IS 1000 da Vinci Surgical System" instead of "Fibre Optic Endoscope" as claimed by the appellant.

2. Final Assessment of Customs Duty and Denial of Concessional Rate:
The Bill of Entry was assessed provisionally and later finalized at a normal customs duty rate of 25% + 16% + 4% (effective 50.8%). The concessional rate of duty under Notification No. 21/2002-Cus - S.No. 363-A was denied.

3. Recovery of Differential Duty and Interest:
The differential duty amounting to Rs. 3,47,63,531 was ordered to be recovered along with interest under Section 28AB of the Customs Act, 1962. The appellant contended that interest was not recoverable as the demand was not raised under Section 28. It was argued that even under Section 18, no interest could be demanded for provisional assessments made before 13.07.2006. The Tribunal agreed, citing judicial precedents, and set aside the demand for interest.

4. Confiscation of Goods for Mis-declaration:
The goods, valued at Rs. 7,59,02,909, were ordered to be confiscated under Section 111(m) of the Customs Act for mis-declaration. However, an option to redeem the goods on payment of a fine of Rs. 75 lakhs was given under Section 125.

5. Imposition of Penalties on Various Parties Involved:
- Penalty on Appellant No. 1 (M/s. Escorts Heart Institute & Research Centre): A penalty of Rs. 3,47,63,531 was imposed under Section 114A for mis-declaration. The Tribunal set aside this penalty, noting that the demand was not raised under Section 28, which is a prerequisite for invoking Section 114A.
- Penalty on Shri Bhuvander Kaul: A penalty of Rs. 3 lakhs was imposed under Section 112(a) for his active role in the mis-declaration. The Tribunal reduced this penalty to Rs. 60,000, aligning with the reduction granted to M/s. J Mitra & Bros.
- Penalty on M/s. J Mitra & Bros: A penalty of Rs. 5 lakhs was imposed for its role in the mis-declaration. The Tribunal reduced this penalty to Rs. 1 lakh, following the precedent set in a similar case involving Care Foundation.
- Penalty on M/s. Elecon Cargo Agency (CHA): A penalty of Rs. 1 lakh was imposed for its role in the mis-declaration. The Tribunal set aside this penalty, finding no evidence of deliberate misconduct or mala fide intent by the CHA.

Conclusion:
The appeals were partially allowed, resulting in the modification of the impugned order to the extent detailed above. The Tribunal set aside the demand for interest and the penalties under Section 114A, reduced the penalties on M/s. J Mitra & Bros and Shri Bhuvander Kaul, and set aside the penalty on the CHA. The Miscellaneous Applications filed by the appellants were also disposed of.

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