2017 (5) TMI 1435 - AT - Customs

Imposition of penalty u/s 114A on interest - Held that - in the case of CCE Vs B. Suresh Vasudev Baliga 2015 (1) TMI 1206 - CESTAT BANGALORE on an identical issue the Tribunal has held that the penalty u/s 114A cannot be imposed on interest - appeal dismissed - decided against Revenue.

Summary

Issues:
- Imposition of penalty under Section 114A of the Customs Act
- Applicability of penalty to corresponding interest under Section 28 AB of the Customs Act

Analysis:

The judgment by the Appellate Tribunal CESTAT Bangalore pertains to two appeals filed by the Revenue against impugned orders passed by the Commissioner of Customs. The appeals dealt with the imposition of penalty under Section 114A of the Customs Act and the applicability of penalty to corresponding interest under Section 28 AB of the Customs Act. The Tribunal noted that the issue in both appeals was identical, leading to their disposal through a single order for convenience.

In the case under consideration, officers of the Directorate of Revenue Intelligence conducted a search that resulted in the detention of goods and recovery of relevant documents. Subsequent investigations, including the issuance of show-cause notices, led to the imposition of penalties, interest demands, and confiscation orders by the Commissioner of Customs. The Revenue challenged the impugned order, arguing that the penalty imposed was insufficient and should have covered both the differential duty confirmed and the corresponding interest demanded under Section 28 AB of the Customs Act.

During the hearing, the Revenue contended that the impugned order's failure to impose a penalty on the corresponding interest was legally unsustainable. The argument was based on the provisions of Section 114A of the Customs Act, which stipulate that a person found liable for duty or interest due to willful misstatement or suppression of facts is also liable to pay a penalty equal to the duty or interest determined. However, the respondent's counsel argued that the impugned order was in line with the law and cited precedents where similar issues were decided in favor of the assessee.

The Tribunal referenced previous decisions, including the case of Bharati Airtel Vs CCE, to support the respondent's position. Notably, in the case of CCE Vs B. Suresh Vasudev Baliga, the Tribunal had ruled that penalties under Section 114A cannot be imposed on interest. The Tribunal's analysis focused on the specific language of Section 114A, highlighting the disjunctive nature of the provision regarding duty and interest liabilities. The Tribunal concluded that the issue was settled in favor of the assessee based on existing jurisprudence.

Given the precedent and clear interpretation of the relevant legal provisions, the Tribunal found no merit in the Revenue's appeals. Consequently, both appeals by the Revenue were dismissed, affirming the impugned orders passed by the Commissioner of Customs.