2016 (12) TMI 573 - AT - Customs

Imposition of penalty u/s 112(b) of the Customs Act 1962 - Valuation of imported goods - second hand superbike - the appellant purchased second hand superbike from one Shri Rishi Sood, who had imported the same under Bill of Entry number 184720 dated 21.11.2005. The said superbike was purchased by the appellant in August 2007 against a consideration of ₹ 8 lakhs paid vide cheque dated 07.08.2007 i.e. after almost a period of more than 2 years from the date of import of the goods. The same was also registered in the appellant s name by the transportation authority - Held that - the appellate authority has come to a clear finding that there is no role played by the present appellant for the under valuation adopted by the importer at the time of import of the goods. But still he has gone ahead in imposing of penalty upon the importer. Otherwise also I find that the import was two years prior to sale of the bike in question, in which case the appellant, in the absence of any evidence to the contrary cannot be held to be the party to the illegal import so as to impose penalty upon him. In view of the findings of the Commissioner (A) himself, there is no justifiable reason to impose penalty - penalty set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Imposition of penalty under section 112(b) of the Customs Act 1962 on the appellant for purchasing an undervalued superbike imported by another party.

Analysis:
The appellant purchased a second-hand superbike from an importer who undervalued the bike at the time of import. Investigations revealed the undervaluation, leading to proceedings against the appellant for confiscation of the bike, demand of differential duty, and imposition of penalty. The Adjudicating Authority confirmed a demand of &8377; 3,39,200.50 and imposed a penalty of &8377; 1 lakh. On appeal, the Commissioner (A) reduced the redemption fine and penalty. The appellant contested the penalty imposition, arguing that he had no role in the undervaluation. The Commissioner (A) acknowledged the lack of appellant's involvement in the undervaluation but upheld a reduced penalty of &8377; 25,000. The appellant challenged this penalty imposition, citing Tribunal decisions.

The appellate authority recognized that the appellant had no role in the undervaluation by the importer and that the import preceded the sale by two years. Without evidence implicating the appellant in the illegal import, no penalty could be justified. Referring to a Tribunal decision, the authority set aside the penalty of &8377; 25,000 imposed on the appellant, allowing the appeal on that ground.

In conclusion, the appellate tribunal set aside the penalty of &8377; 25,000 imposed on the appellant under section 112(b) of the Customs Act 1962 for purchasing an undervalued superbike imported by another party. The tribunal found no evidence implicating the appellant in the undervaluation or illegal import, leading to the decision to overturn the penalty.