2018 (5) TMI 1680 - AT - Customs

Penalty u/s 114A - undervaluation of imported goods - used printing, cutting machines - submission of undervalued invoice to Customs for payment of duty - Held that - Original authority has considered all the documents as well as the statements of the Proprietor and thereafter, re-determined the value of imported goods which has been accepted by the Proprietor and has paid the duty. As per the proviso to Section 114A of the Act, the lower appellate authority ought to have set aside the imposition of penalty under Section 112(a) of the Customs Act but instead of doing that the appellate authority has set aside the penalty under Section 114A of the Customs Act and has wrongly sustained the penalty imposed under Section 112(a) of the Customs Act - penalty on the appellant under Section 112(a) is set aside and penalty under Section 114A is sustained and upheld. Quantum of Redemption fine - Held that - Keeping in view the valuation done by original authority on the basis of the documents and the basis of admission of the proprietor, the authorities have found that the goods are valued at ₹ 91,82,096/- being the transaction value for the purpose of assessment under Rule 3 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 - redemption fine upheld. Appeal allowed in part.

Summary

Issues:
1. Penalty imposed under Section 114A of the Customs Act, 1962.
2. Redemption fine imposed and penalties under Section 112(a) of the Act.

Analysis:
Issue 1: Penalty under Section 114A of the Customs Act
The appellant imported used printing, cutting machines from Japan and was found undervaluing goods, leading to the imposition of penalties. The Commissioner (A) set aside the penalty under Section 114A but upheld the penalty under Section 112(a). The appellant argued that penalties under both sections cannot be imposed simultaneously as per the proviso to Section 114A. The appellate authority's decision was challenged based on this legal provision. The Tribunal held that the penalty under Section 112(a) was set aside, and the penalty under Section 114A was sustained, as per the proviso to Section 114A, which prohibits imposing penalties under both sections concurrently.

Issue 2: Redemption fine and penalties under Section 112(a)
The appellant contested the redemption fine of ?10 lakhs imposed by the original authority as unreasonable, citing lack of market value assessment and legal precedents. The AR defended the fine, stating it was based on correct valuation and proportionate to the margin of profit. The Tribunal found that the original authority correctly determined the value of imported goods, and the redemption fine was justified based on valuation documents and the proprietor's admission of undervaluation. The Tribunal upheld the redemption fine, emphasizing that it was in accordance with Customs Valuation Rules and the Commissioner (A)'s observation on profit margin. The penalty under Section 112(a) was set aside, while the redemption fine and penalty under Section 114A were upheld, concluding the appeal partially in favor of the appellant.

In conclusion, the Tribunal partially allowed the appeal, sustaining the redemption fine and upholding the penalty under Section 114A of the Customs Act, while setting aside the penalty under Section 112(a). The decision was based on the legal provisions, valuation documents, and the admission of undervaluation by the appellant, ensuring compliance with Customs regulations and precedents.