2019 (5) TMI 1183 - AT - Customs

Waiver of Penalty u/s 114A as well as dropping confiscation/redemption find under Section 111(o) of the Customs Act, 1962 - demand of duty alongwith Interest - import of goods for repair, and re-export the goods thereafter - benefit of N/N. 158/95-Cus dated 14.11.1995 - it was alleged that the goods were neither re-exported after repairs/reconditioning nor there was a request for the extended period by the appellant - HELD THAT - The goods have been imported by the respondent by claiming benefit of duty exemption under Notification No. 158/95-Cus dated 14.11.1995 so as to re-export the same after doing the necessary repair which the respondent tried their level best but due to some technical issues, they could not do the repair as per the specification of the client and therefore they could not re-export the said goods within the time prescribed in the Notification. Further, the Commissioner (Appeals) has rightly held that there is no collusion and wilful mis-statement or suppression of fact in the present case because the respondent has admitted their liability along with interest but they have only challenged before the Commissioner the imposition of penalty under Section 114A and confiscation of goods under Section 111(o) - Further, the Commissioner (Appeals) has rightly held that there is no Mens rea on the part of the respondent to evade payment of duty and therefore he has rightly set aside the penalty and the confiscation. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against dropping of penalty and confiscation under Customs Act, 1962
- Compliance with duty exemption Notification No. 158/95-Cus
- Misuse of duty exemption provision
- Mens rea in not re-exporting goods
- Applicability of Section 114A
- Admissibility of penalty and confiscation

Analysis:

The appeal before the Appellate Tribunal CESTAT Bangalore involved challenging the impugned order passed by the Commissioner (Appeals), which dropped the penalty imposed under Section 114A and the confiscation/redemption fine under Section 111(o) of the Customs Act, 1962. The Commissioner (Appeals) confirmed the duty liability along with interest. The case revolved around the import of Gear Sets by M/s Bevel Gears India Pvt. Ltd. from M/s HIC Corporation, Japan, claiming Customs Duty exemption under Notification No. 158/95-Cus for re-export after repair. However, the goods were not re-exported within the stipulated time, leading to the imposition of duty, interest, penalty, and confiscation by the lower adjudicating authority.

The Learned AR for the Revenue argued that the impugned order dropping the penalty and confiscation was not legally sustainable as the goods were not imported specifically for repair and re-export but rather re-imported due to a delayed sale to another buyer. He cited legal precedents to support his contention and emphasized the failure of the respondent to meet all conditions of the exemption Notification, justifying the penalty and confiscation.

On the other hand, the Learned Counsel for the respondent defended the impugned order, stating that the delay in re-export was due to technical issues and efforts were ongoing to find overseas buyers for the goods. He argued against the application of Section 114A, highlighting the absence of mens rea to evade duty payment and citing legal cases to support his position.

After hearing both parties, the Tribunal found that the Commissioner (Appeals) correctly relied on precedents to drop the penalty and confiscation. It noted that the respondent had imported the goods for repair and re-export under the duty exemption Notification but faced technical challenges in meeting the client's specifications, leading to the delay in re-export. The Tribunal agreed that there was no collusion or wilful misstatement to evade duty payment, thus justifying the decision to set aside the penalty and confiscation. The Tribunal referenced specific findings of the Commissioner (Appeals) to support its conclusion and upheld the impugned order, dismissing the Revenue's appeal.

In conclusion, the Tribunal's detailed analysis focused on the compliance with duty exemption conditions, misuse of exemption provisions, presence of mens rea in re-exporting goods, applicability of Section 114A, and the admissibility of penalty and confiscation under the Customs Act, ultimately upholding the Commissioner (Appeals) decision.