2024 (4) TMI 378 - AT - Customs

Classification of imported goods - Narrow Woven Fabric Webbing - to be classified under Customs Tariff Item (CTI) or under CTI 58063200? - suppression of facts or not - extended period of limitation - Levy of penalty u/s 112 (a)(i) and u/s 114AA of CA. Extended period of Limitation - first grievance of the Revenue is that the Commissioner had confirmed the demand invoking the extended period of limitation along with interest but had not imposed the mandatory penalty under section 114A - HELD THAT - It needs to be pointed out at this stage that section 28 of the Customs Act is not the charging section. The charge of customs duty comes from section 12 according to which duties of customs shall be paid on the goods imported into or exported from India. However, if the duty which should have been paid was either not paid or was short paid, the remedy to recover such duties is available to the Revenue under section 28. This section also has an inbuilt limitation. Beyond the period of limitation although the charge would continue, Revenue will no longer have the remedy to recover the duties short paid. In the normal course, the limitation is of one year - In this case, although the Commissioner found that there was no collusion or willful mis-statement or suppression of facts, the respondent had fairly conceded the charge of duty and agreed to pay the same along with interest. It is for this reason, that the demand was confirmed for the extended period and not because any evidence that these factors were present. Insofar as section114A is concerned, it pertains to penalty and not a charge. Therefore, penalty cannot be imposed when it has been explicitly recorded that there was no collusion or willful mis-statement or suppression of facts which are essential to impose penalty under section 114A. Confiscation of the goods under section 111(m) - HELD THAT - The respondent did not contest the imposition of penalty and has already been paid the same. There are no ground to order confiscation of the goods which were not available. Holding that the goods were liable for confiscation under section 111(m) at this stage will be nothing more than a academic exercise as the penalty which would flow from such statement has already been imposed and has not been contested by the respondent. Penalty under section 114AA - HELD THAT - The background in which section 114AA was introduced. Nothing in the section indicates that it does not apply to import. It will apply to both imports and exports and the recommendation of the Committee was that it should be applied with due diligence and care so as to avoid any undue harassment to trade. The Commissioner did not impose any penalty under section 114AA because it can be imposed only if there is evidence that the person has not knowingly or intentionally made, signed or used or causes to be used, any declaration, statement or document which is false or incorrect. The Commissioner has also recorded that the goods which were imported by the respondent were examined and assessed by the department before allowing clearance - there are no reason to disagree with this finding of the Commissioner. Therefore, there is no case to impose penalty under section 114AA. The impugned order is upheld and the appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
The issues involved in this case are:
1. Classification of imported goods under Customs Tariff Act, 1975.
2. Confiscation of goods under section 111(m) of the Customs Act, 1962.
3. Imposition of penalties under sections 114A and 114AA of the Customs Act, 1962.

Classification of Imported Goods:
The Revenue appealed against the Order-in-Original that re-classified "Narrow Woven Fabric Webbing" under a different Customs Tariff Item. The Commissioner confirmed the duty demand under section 28(4) but did not impose penalties under sections 114A and 114AA. The Revenue argued that penalties should have been imposed as the duty was confirmed under section 28(4). However, the respondent contended that there was no evidence of collusion or willful mis-statement, hence penalty under section 114A was not applicable. The Tribunal noted that the demand was confirmed based on a concession by the respondent, not due to the presence of collusion or mis-statement. As penalties are separate from the charge of duty, and as no evidence of collusion was found, the appeal was dismissed.

Confiscation of Goods:
The Revenue contended that the goods should have been liable for confiscation under section 111(m) as proposed in the show cause notice. However, the Commissioner did not hold the goods liable for confiscation under section 111(m) and imposed a penalty under section 112(a)(i). The respondent argued that there was no collusion or suppression of facts, hence penalty under section 114A was not applicable. The Tribunal found that the goods were not confiscated as they were not available, and the penalty under section 112 had already been paid by the respondent. As the penalty had been imposed and paid, there was no need to order confiscation at this stage.

Imposition of Penalties:
The Revenue raised concerns about the non-imposition of penalties under sections 114A and 114AA. The respondent argued that penalty under section 114AA was not applicable as there was no evidence of false or incorrect declarations. The Tribunal examined the purpose of section 114AA, which applies to both imports and exports, and found that the Commissioner's decision not to impose penalties was justified. As there was no evidence of fraudulent declarations, penalties under sections 114A and 114AA were not warranted. Therefore, the impugned order was upheld, and the Revenue's appeal was dismissed.