2018 (7) TMI 867 - AT - Customs

Penalty u/s 114AA of CA - mis-declaration of imported goods - case of Respondent is that the provision under section 114AA deals with situations of intentionally making or using any declaration, statement or document which is false or incorrect in the transaction of any business for the purpose of Customs Act, in present case there is no situation that the transaction was a paper transaction - Held that - The Commissioner (Appeals) has rightly set aside the penalty under Section 114AA since the present case involves importation of goods and is not a situation of paper transaction - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Classification of goods declared in the Bill of Entry.
2. Alleged violations of Customs Act and penalties imposed.
3. Appeal against setting aside of penalty under Section 114AA.
4. Cross-objection by respondent regarding demand confirmed.

Classification of Goods:
The case involved a dispute where goods declared as "Furniture, Electronics goods etc." were found to be misdeclared upon examination. Items declared as "Electronic Power Pot" were actually "Stage Silver Fountain" firecrackers, leading to reclassification under CTH 36041000. Additionally, amplifiers and speakers were found to be old and not declared as such. The show cause notice proposed reclassification, duty demand, confiscation, and penalties.

Violations and Penalties:
The original authority rejected the declared value for electronic items, confiscated goods, and imposed penalties under Sections 112(a) and 114AA of the Customs Act. The Commissioner (Appeals) set aside the penalty under Section 114AA, leading to the department's appeal before the Tribunal. The department argued for the penalty under Section 114AA, emphasizing repeated violations by the respondent and the necessity of penalties despite Section 112(a imposition.

Appeal Against Penalty Setting Aside:
The respondent filed a cross-objection seeking to set aside the demand confirmed after rejecting the declared value. The department contended that the penalty under Section 114AA should not have been set aside by the Commissioner (Appeals) as it serves a distinct purpose from Section 112(a) penalties. The respondent argued against the applicability of Section 114AA in their case, highlighting the absence of a paper transaction scenario.

Judgment Analysis:
The Commissioner (Appeals) set aside the penalty under Section 114AA after considering the rationale behind its introduction, emphasizing cases of fraudulent exports and the enhanced penalty provision. The Tribunal upheld this decision, noting that the penalty under Section 114AA was excessive given the circumstances of the case involving actual importation of goods, not a paper transaction. The appeal by the department was dismissed, and the respondent's cross-objection was also rejected.

This detailed analysis highlights the classification dispute, violations of the Customs Act, penalties imposed, appeal arguments, and the Tribunal's judgment based on the interpretation of relevant legal provisions and factual considerations.