2019 (9) TMI 1113 - AT - Customs

Imposition of Penalty u/s 112(a)/114AA of CA - import of goods and sale on High seas sale - mis-declaration of value - short payment of duty - Section 108 of CA - HELD THAT - Once the person who has filed the Bill of Entry has admitted and paid the differential duty on account of misdecalaration of value, the value as determined in the show cause notice and by the settlement commission will become the value under section 14 of the Customs Act, 1962. We do not find any merits in the submissions of the Appellant that the Commissioner should have again considered and re-determined the value, as per the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. Once the value has been found misdeclared the goods become liable for confiscation under Section 111(m) of the Customs Act, 1962 and the person misdeclaring or abetting in such misdeclaration is liable to penalty under section 112(a). Appellants Shri Kaushal A Shah and Shri Jiten Shah are responsible for issuance of the invoice misdeclaring the value. This invoice was the document which was the basis for filling the B/E misdeclaring the value of imported goods. Once it is established that Shri Kaushal A Shah and Shri Jiten Shah were responsible for filing or causing to file the documents misdeclaring the value of goods, section 114AA gets attracted. It is not even the case in the adjudication order that the penalties for the same offence and under the same provision has been imposed upon the proprietor and proprietorship concerns. The adjudication order itself refrains from imposing penalty under Section 112(a), on the proprietors as penalties under the said section have been imposed on proprietorship firms. Appeal dismissed.

Issues Involved:
1. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
2. Imposition of penalties under Section 114AA of the Customs Act, 1962.
3. Validity of penalties on co-noticees when the main noticee has settled the issue.
4. Interpretation and applicability of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007.
5. Legal implications of the Twenty Seventh Report of Standing Committee on Finance on the Taxation Law (Amendment) Bill, 2005.
6. Distinction between penalties imposed on proprietorship firms and their proprietors.

Detailed Analysis:

1. Imposition of Penalties under Section 112(a) of the Customs Act, 1962:
The Commissioner imposed penalties on various firms under Section 112(a) of the Customs Act, 1962, for abetting the misdeclaration of the value of imported goods. The appellants argued that Section 111(d) and 111(m) could not have been invoked as the goods were neither prohibited nor misdeclared by them. However, the Tribunal held that once the value was found to be misdeclared, the goods became liable for confiscation under Section 111(m), and the persons involved in the misdeclaration were liable for penalties under Section 112(a).

2. Imposition of Penalties under Section 114AA of the Customs Act, 1962:
The appellants contended that Section 114AA, which pertains to fraudulent exports to avail export promotion schemes, was wrongly applied to their case. The Tribunal disagreed, stating that the section applies to any misdeclaration of value, including imports. The Tribunal cited the Supreme Court's decision in Doypack Systems Pvt Ltd., emphasizing that the plain and unambiguous wording of the statute should be followed.

3. Validity of Penalties on Co-noticees when the Main Noticee has Settled the Issue:
The appellants argued that penalties could not be imposed on co-noticees if the main noticee had settled the issue. The Tribunal referred to the case of Mamta Garg, where it was held that penalties could still be imposed on co-noticees even if the main noticee settled the case. The Tribunal emphasized that each noticee's role should be examined independently to determine their liability.

4. Interpretation and Applicability of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007:
The appellants argued that penalties for undervaluation could not be imposed without referring to the Customs Valuation Rules, 2007. The Tribunal found no merit in this argument, stating that once the value was admitted and paid by the person filing the Bill of Entry, the value determined in the show cause notice and by the Settlement Commission would be considered under Section 14 of the Customs Act, 1962.

5. Legal Implications of the Twenty Seventh Report of Standing Committee on Finance on the Taxation Law (Amendment) Bill, 2005:
The appellants cited the Twenty Seventh Report to argue that Section 114AA should only apply to fraudulent exports. The Tribunal rejected this argument, citing the Supreme Court's decision in Doypack Systems Pvt Ltd., which stated that external aids to interpretation should not be relied upon when the statute's wording is clear and unambiguous.

6. Distinction between Penalties Imposed on Proprietorship Firms and Their Proprietors:
The appellants argued that penalties could not be imposed on both the firm and the proprietor separately. The Tribunal clarified that the adjudication order refrained from imposing penalties under Section 112(a) on the proprietors since penalties had already been imposed on the proprietorship firms.

Conclusion:
The Tribunal dismissed the appeals, upholding the penalties imposed by the Commissioner. The Tribunal found no merit in the appellants' arguments and emphasized the clear and unambiguous wording of the relevant statutory provisions. The decision was pronounced in the open court on 24.09.2019.

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