2018 (2) TMI 1136 - AT - Customs

Misclassification and misdeclaration of value of imported goods - Concentrated mineral drops (CMD), Elete Electrolyte and NanoSiI etc. - penalties u/s 112 (a) and 114 AA of the CA 1962 - Held that - the penalties imposed u/s 112 (a) requires interference as the issue with regard to the classification has now been decided in favour of the appellants - However, since there is finding by the Tribunal that the valuation of the goods is not proper and requires redetermination, for which reason the matter has been remanded, the penalties imposed under Section 112 (a) cannot be wholly set aside - the quantum of penalty is reduced. Penalties under Section 114 AA - Held that - There is no allegation in the SCN that the appellants had used any false documents in the transaction. The ingredients stated in the said Section is not established by the department and therefore the imposition of penalties u/s 114 AA, is unwarranted - penalty set aside. Appeal allowed in part.

Summary

Issues: Misclassification and misdeclaration of value of imported goods, imposition of penalties under Section 112 (a) and 114 AA of the Customs Act, 1962.

Analysis:
The appellants, co-noticees in the show cause notice (SCN) dated 04.03.3013, were accused of misclassification and misdeclaration of value of imported goods. The penalties under Section 112 (a) and 114 AA of the Customs Act, 1962, were imposed on various imports made through different ports. The appellants argued against the penalties, stating that Section 114 AA was not applicable as there were no allegations of using false documents. They also highlighted that the issue of classification had been decided in their favor previously. The adjudicating authority had imposed penalties under Section 112 (a) based on misclassification and undervaluation of goods, which the appellants contested. The Ld. AR supported the findings in the impugned order, stating that penalties were rightly imposed due to under valuation of goods.

The Tribunal, after hearing both sides, considered the previous decision where the issue of classification was decided in favor of the appellants. The penalties under Section 112 (a) were reduced, acknowledging the need for redetermination of the goods' valuation. The penalties under Section 114 AA were set aside as the department failed to establish the necessary ingredients for imposing such penalties. The final penalties imposed on each appellant were modified accordingly.

In conclusion, the penalties imposed under Section 112 (a) were reduced based on the favorable classification decision, and the penalties under Section 114 AA were entirely set aside due to the lack of evidence supporting their imposition. The appeals were partly allowed as per the modified penalties.