2024 (4) TMI 791 - AT - Customs

Levy of penalty u/s 114A - Classification of imported goods - duty demand - suppression of facts - import of Shell Flavex Oil 595 B/H - item being Plasticizer - classified by all Custom Houses under CTH 38122090 but DRI, Gandhidham classified under CTH 27079900 - HELD THAT - We find that the case relates to classification of the imported goods, the appellant have classified the goods under CTH 38122090 on a bona fide belief that the imported goods were Plasticizer and the same were used as Plasticizer in the manufacture of the tyre. The compound Plasticizer is clearly mentioned in the tariff entry against CTH 38122090. Therefore, the bona fide belief of the appellant that the product being a plasticizer classifiable under CTH 38122090 cannot be doubted with. We further find that the appellant without contesting the duty liability paid the entire amount along with interest and seek relief only for waiver of penalty. We also observed that in all over India at all the Ports said goods was being classified and accepted under CTH 38122090 considering the same as plasticizer. Therefore, it is not only belief of the appellant but also the view of the department that the goods is classifiable under CTH 38122090. However, it could only be ascertained that the good is classified under CTH 27079900 after detailed analysis of the product. Therefore, penalty u/s 114A cannot be imposed. Thus, in our mind it is absolutely clear that non payment of duty on the part of the appellant is not by reason of suppression of fact, collusion or any willful misstatement. Therefore, the ingredients for imposing penalty u/s 114A are absent. Therefore, the penalty u/s 114A cannot be imposed. As per the discussion the duty demand along with interest and payment thereof are upheld and maintained. The penalty imposed u/s 114A is set aside. Accordingly, the appeal is allowed in above terms.

Summary

Issues Involved: Classification of imported goods, imposition of penalty u/s 114A of the Customs Act, 1964.

Classification of Imported Goods:
The appellant's factories in Kerala, Gujarat, and Tamil Nadu are engaged in manufacturing Automotive Tyres. The issue arose from the import of Shell Flavex Oil 595 B/H for use in the Gujarat factory. Initially classified under CTH 38122090 by all Custom Houses, the DRI reclassified it under CTH 27079900. The appellant paid the duty without contesting the changed classification. The dispute centered on whether the penalty u/s 114A was justified.

Imposition of Penalty u/s 114A:
The appellant contended that the nature of the goods could only be known after detailed testing, and therefore, no mala fide intention could be attributed to them. They argued that since all Commissionerates were classifying the goods under CTH 38122090, the correct classification could only be determined after detailed analysis. The appellant paid the duty before the show cause notice was issued, which, according to them, negated the need for the penalty. The Tribunal agreed, noting that the appellant acted in good faith and that the duty was paid without suppression of facts or willful misstatement, absolving them from penalty under Section 114A.

Conclusion:
After considering both sides' submissions and reviewing the facts, the Tribunal upheld the duty demand and payment of interest. However, the penalty imposed u/s 114A was set aside, as the appellant's actions did not meet the criteria for penalty under the said section. The appeal was allowed in favor of the appellant.