2019 (10) TMI 968 - AT - Customs

Demand of Penalty - payment of duty with interest before issuance of SCN - no wilful suppression of facts - HELD THAT - Admittedly appellant have paid the differential duty with interest much before the issue of SCN. Further, subsequent to issue of SCN, appellant have also deposited penalty @ 15% on 19.07.2017 i.e. within one month of the service of the SCN - sub-section (5) read with sub-section and (6) of Section 28 of Customs Act provides that, where any duty is short levied has not been charged by reason of collusion or any wilfull mis-statement or suppression of facts by the importer, to whom a notice have been served under sub-section (4), such person may pay the duty in full or in part as may be, accepted by him and the interest payable thereon and the penalty equal to 15% of the duty specified in the notice, or the duty so accepted by that person, within thirty days of receipt of the notice and informed the proper officer of such payment in writing, the proper officer shall on recording satisfaction that the duty with interest and penalty (@15%) have been paid in full, then the proceeding in respect of such person to whom notice is issued under sub-section (4) shall be deemed to be conclusive. In view of the provisions of sub-section (5), (6) read with sub-section (4) of Section 28, the proceedings stood concluded on deposit of differential duty alongwith interest and 15% penalty - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported Aseptic Packaging Material under Customs Tariff headings 48115910 and 48115110, Allegations of wilful mis-declaration and evasion of customs duties, Imposition of penalty under Sections 112(a) and 114AA of the Customs Act, 1962.

Analysis:
The appellant, engaged in manufacturing fruit pulp and milk-based beverages, imported Aseptic Packaging Material from China after procuring it locally for over 20 years without issue. Initially unaware of bleached and unbleached categories, the appellant classified the material under heading 48115910, believing it to be the same as previously procured. Upon realizing the error, the appellant voluntarily paid the differential duty and interest, demonstrating good faith and compliance.

The Customs Department's subsequent enquiry led to the appellant's clarification from the Chinese supplier, confirming the bleached nature of the imported material. The appellant promptly informed the department and paid the differential duty, showing a commitment to rectify the classification mistake. The appellant's proactive approach, voluntary payments, and lack of intent to evade duty underscore their compliance and good faith in rectifying the error.

Despite the appellant's cooperation and rectification, a show cause notice alleged wilful mis-declaration and evasion of customs duties. The notice proposed demanding differential duties, imposing penalties under Sections 112(a) and 114AA of the Customs Act, and confiscating the goods. The appellant contested the notice, emphasizing the absence of malafide intent and their timely payment of duties and penalties, seeking a fair resolution based on the circumstances.

The Tribunal considered the appellant's early payment of differential duty, interest, and penalty, in line with statutory provisions allowing for such payments within 30 days of a notice. Citing Section 28 of the Customs Act, the Tribunal concluded that the proceedings were conclusive upon the appellant's compliance with duty, interest, and penalty requirements. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits, recognizing the appellant's proactive efforts to rectify the classification mistake.