2019 (2) TMI 503 - AT - Customs

Quantum of penalty imposed u/s 114A of the Customs Act, 1962 - Revenue submitted that only the duty involved was taken into account, but not considered the amount of interest liable to be paid on the said duty - Held that - The question of law whether component of interest be considered while arriving at the quantum of penalty prescribed under Section 114A of the Customs Act, 1962 has been considered by the Tribunal in Bharti Airtel Ltd. s case 2012 (7) TMI 233 - CESTAT, BANGALORE , where it was held that Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Imposition of penalty under Section 114A of the Customs Act, 1962 without considering the amount of interest liable to be paid on the duty.

Analysis:

The appeals filed by the Revenue against respective Orders-in-Original were taken up together for hearing and disposal as they involved a common issue. The Revenue contended that in imposing penalties under Section 114A of the Customs Act, 1962, only the duty involved was considered, without taking into account the amount of interest liable to be paid on the said duty. On the other hand, the respondents argued that the issue of whether interest should be included in determining the penalty under Section 114A had been settled by the Tribunal in various cases, including Bharti Airtel Ltd. Vs. Commissioner of Customs, Bangalore, Mangalore Refinery & Petrochemicals Ltd., Sony Sales Corporation, Krishna Sales Corporation, 3D Network Pvt. Ltd., and B Suresh Vasudev Baliga.

The Tribunal, in the case of Bharti Airtel Ltd., had already considered the question of law regarding whether the component of interest should be taken into account while determining the penalty under Section 114A of the Customs Act, 1962. The Tribunal observed that Section 114A requires the penalty to be "equal to the duty or interest so determined." It was noted that the demand of duty to be confirmed should not exceed the duty demanded in the show-cause notices. The Tribunal also highlighted that the interest payable depends on the actual date of payment of the duty determined, and the Commissioner, at the time of adjudication, may not have been able to determine the actual interest amount. Therefore, penalties equal to the duty determined were considered appropriate in such cases.

Based on the precedent set in the Bharti Airtel Ltd. case and subsequent cases, the Tribunal found no merit in the appeals filed by the Revenue. Consequently, the appeals were dismissed, following the principle that penalties under Section 114A should be equal to the duty or interest determined.