2017 (3) TMI 829 - AT - Customs

Imposition of penalty u/s 114(iii) of CA, 1962 - DEPB scheme - The allegation raised against the appellant is that they have mentioned wrongly the serial no. of the product code in the shipping Bill - Held that - This would not tantamount to mis-classification of the goods. Further the Ld. Counsel has stated there is no column in the shipping Bill to mention the serial no. of the product code of DEPB schedule. This indicates that it is not a vital material to be stated in the shipping bill. Therefore the provision contained in Section 113(i) also would not entirety be applicable to the facts of the case. There is no dispute with regard to the value declared or the classification of the goods. Therefore, neither Section 113(i) nor Section 113(d) are attracted in the above case and therefore the penalties imposed requires to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to penalty under Section 114(iii) of Customs Act, 1962 for mis-classification of products under DEPB scheme.

Analysis:
1. The case involved a challenge to a penalty of &8377; 2 lakhs imposed on the appellant under Section 114(iii) of the Customs Act, 1962 for mis-classifying products under the DEPB scheme.

2. The appellants, manufacturers and exporters of pharmaceutical products, exported goods under the DEPB scheme. They were issued a show cause notice for wrongly classifying products under a specific code in the DEPB schedule, resulting in a higher credit claim. The original authority imposed a penalty of &8377; 3 lakhs and confirmed duty demand and interest. The Commissioner (Appeals) later reduced the penalty to &8377; 2 lakhs but upheld the confiscation under Section 113(i), leading to the appeal before the Tribunal.

3. The appellant argued that there was no actual mis-classification, as the wrong serial number in the shipping bill was inadvertent, and there was no space to mention the correct serial number. The appellant claimed that neither Section 113(d) nor Section 113(i) applied, and thus, no penalty should be imposed.

4. The department contended that the appellant availed excess credit due to mis-declaration, leading to the incorrect classification under the DEPB scheme. They argued that confiscation under Section 113(i) was justified, as discussed by the adjudicating authority.

5. The Tribunal analyzed the provisions of Section 113(d) and Section 113(i) of the Customs Act, 1962. It concluded that the facts did not align with Section 113(d) as alleged by the adjudicating authority. The Tribunal also found that the misstated serial number did not amount to mis-classification, rendering Section 113(i) inapplicable. Consequently, the penalties were set aside.

6. Additionally, the appellant raised the jurisdictional issue, arguing that customs authorities lacked jurisdiction to issue show cause notices regarding credit taken on DEPB scripts, which falls under the jurisdiction of DGFT. However, since the goods were not liable for confiscation under either Section 113(d) or Section 113(i), the penalty was set aside, and the appeal was allowed.

This detailed analysis of the judgment in the case involving a penalty under Section 114(iii) of the Customs Act, 1962 provides a comprehensive overview of the legal arguments, interpretations of relevant sections, and the ultimate decision of the Tribunal to set aside the penalties imposed on the appellant.