2017 (9) TMI 1504 - AT - Customs

Penalty u/s 114A - Classification of imported goods - Optical Fibre Cables - Held that - there was surely some considerable confusion in the classification of the product - the appellants paid up the entire duty liability along with interest thereon, almost around nine months before the issue of show-cause notice, the imposition of penalty is not only unfair and unjust - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods under CTH 8544 or CTH 9001, imposition of penalty under section 114A of the Customs Act, 1962

Classification Issue:
The case involved the classification of "Telecommunication Fibre Optic Cables" by the appellants seeking duty exemption under Notification No. 24/2005. The department contended that 'Tight Buffer Cables' fall under CTH 8544 and 'Loose Tube Cables' under CTH 9001. The department alleged that the importers suppressed the loose tube nature of the cables, leading to a show-cause notice proposing a demand of differential duty. The appellants argued that they imported the items under CTH 9001 based on genuine belief and no suppression occurred. The Tribunal noted conflicting decisions on similar cases and referred to the confusion in classification.

Penalty Imposition Issue:
The appellants contested the imposition of penalty under section 114A of the Customs Act, 1962. They had paid the entire liability along with interest before the show-cause notice was issued, which was not contested. The appellants argued that the penalty was unjust as the issue was a technical classification one, and there was no suppression of facts. The department, however, supported the penalty imposition, citing the supplier's clarification and an Advance Ruling requiring classification under CTH 9001. The Tribunal considered past rulings and observed confusion in the classification of similar products.

Judgment:
The Tribunal found that the classification of "Optical Fibre Cables" was indeed confusing, with conflicting decisions by Tribunals. Referring to past cases, the Tribunal noted that the issue had even been referred to a Larger Bench. In a previous ruling, the Tribunal had observed that imposing a penalty would be unfair even in case of an adverse decision. Considering that the appellants had paid the duty liability well before the show-cause notice, the Tribunal deemed the penalty imposition unjust and against its previous directions. Consequently, the penalty was set aside in favor of the appellants, without affecting the duty demand and interest payment.

This comprehensive analysis highlights the core issues of classification and penalty imposition in the legal judgment, detailing the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.