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2017 (3) TMI 1348 - AT - CustomsSkillful grafting to deceive the tribunal - Valuation of imported goods - advance royalties - related party transaction - non-inclusion of advance royalties paid to overseas supplier, a related person, and suppression of this fact at the time of import - confiscation - redemption fine - penalty - Held that - a skilful grafting has been attempted with intent to deceive the Tribunal or that a master of the sleight, for reasons best known to such person, has inveigled the review committee into raising this ground incorrectly. In either situation, it does not do credit to the integrity or the expertise of officials who constituted this particular Review Committee. In the most polite terms; it can only be described as a matter of shame and it is expected the Central Board of Excise & Customs take steps to ensure that the incompetence and ineptitude is reflected in their records and that other officers are impressed upon the need to guard against such demonstrated deceit. Confiscation is a proceeding that follows the determination of goods having offended specific provisions of the Customs Act, 1962. With such confiscation, and consequent redemption, the offending goods lose that pejorative qualification and are regularised. When goods are subject to confiscation for misdeclaration of value, the offence of misdeclaration and its attendant tentacles get erased. Payment of duty is, thereby, on goods that are no longer offending and, hence, cannot be imposed with another penalty u/s 114A. Adjudicating authorities should be mindful of this position and choose the penalty that they wish to impose. With the mandatory nature of section 114A in the circumstances enumerated therein, the imposition of penalty u/s 112 would compromise recourse to section 114A - In the present instance, only one of the penalties could have been imposed and the adjudicating authority has, by adopting section 112, regularised the offence of misdeclaration to foreclose imposition of penalty under section 114A - penalty u/s 114A is mandatory and, by setting aside the penalty on the importers u/s 112, remand the matter back to original authority to determine the imposition of penalty afresh. Appeal allowed by way of remand.
Issues:
Appeals against order-in-original for non-inclusion of advance royalties and suppression of facts at the time of import; Confiscation and redemption fine; Imposition of penalties under Customs Act, 1962; Failure to invoke penalty under section 114A. Analysis: 1. The appeals were filed by Revenue challenging an order-in-original regarding alleged non-inclusion of advance royalties and suppression of facts during import. The order revised assessable value, confirmed differential duty, and directed clearance of other goods on payment of duty. Confiscation was imposed on available goods, with penalties under section 112 of the Customs Act, 1962. 2. Revenue contended that non-confiscated goods should have been confiscated with a redemption fine. Citing precedents, Revenue argued for invoking penal provisions under section 114A of the Customs Act, 1962 alongside duty liability confirmed under section 28. 3. The Tribunal clarified that confiscation is a prerequisite for penalties under section 112, emphasizing that offending goods must be liable for confiscation. The absence of goods for confiscation impacts the imposition of penalties, and the redemption fine is contingent on the importer's decision to reclaim the goods. 4. The Tribunal rejected Revenue's argument, highlighting that the decisions cited did not support confiscation and redemption of unavailable goods. The legal position emphasized the distinction between confiscation and redemption, with the importer's discretion playing a crucial role in the process. 5. Regarding the failure to impose penalty under section 114A, the Tribunal analyzed the conflicting interpretations of the provision. It critiqued the erroneous extraction of the provision by the review committee, emphasizing the need for accurate legal understanding and application. 6. The Tribunal elucidated the penalty framework in indirect taxation, emphasizing that once goods are confiscated and regularized, imposing additional penalties like under section 114A is not warranted. It underscored the adjudicating authority's responsibility to select the appropriate penalty provision. 7. Ultimately, the Tribunal rejected Revenue's appeals, citing the incorrect interpretation of legal provisions and the need to uphold integrity and competence in legal proceedings. The decision aimed to clarify penalty imposition under the Customs Act, 1962 and deter deceptive practices in legal interpretations. This detailed analysis of the judgment provides insights into the legal nuances surrounding the issues raised in the appeals and the Tribunal's comprehensive reasoning for rejecting Revenue's contentions.
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