2024 (5) TMI 431 - AT - Customs

Duty liability - Eligibility for the alternative exemption notification to limit recovery of duty - Imports of 'Phased array Doppler system model SSD-630' - exemption of notification no. 64/88-Cus - interest - confiscation - Penalty - HELD THAT - The order of the Tribunal in the earlier round is not explicit on that aspect and, indeed, could not, in absence of ground canvassed then that bill of entry should stand amended, under the authority of section 149 of Customs Act, 1962, have been. Thus, the direction of the Tribunal was limited to the factual matrix as set out in the show cause notice except for consideration of post-notice please for alternative, and more beneficial, duty liability on the specific plea of the appellant. It is solely on the fact of postassessment notice that the plea against recourse to retrospective jurisdiction u/s 47(2) of Customs Act, 1962 could lie and is allowed now. Consequently, the stand cannot be reversed to press for lack of jurisdiction to invoke section 112 of Customs Act, 1962. It is settled law that penalty cannot be enhanced in subsequent proceedings except in challenge that places importer on notice of intend to do so. That would have been valid premise had appeal of Revenue been preferred for that purpose. The erstwhile adjudication order had limited the penalty to ₹ 15,000/- for not having discharged duty liability of ₹ 15,35,846/- at the time of clearance against claim of condition of eligibility which, uncontestably, had not been complied with. Subsequently, with the duty liability determined at ₹ 5,06,253/- in the fresh proceedings, the enhancement is not only against settled law but also, unquestionably, inequitable. It would, therefore, be appropriate that the penalty be restricted to ₹ 15,000/-. Accordingly, the impugned order is modified to set aside the interest liability and to limit the penalty of ₹ 15,000/-. Appeal of Revenue is dismissed.

Summary

Issues involved:
The judgment involves issues related to eligibility for alternative exemption notification, duty liability, interest under section 28AA of Customs Act, 1962, fine, penalty under section 112 of Customs Act, 1962, and the framework of show cause notice.

Eligibility for Alternative Exemption Notification:
The appellant-importer had imported a phased array Doppler system and claimed exemption under notification no. 64/88-Cus. However, they later argued that notification no. 65/88-Cus was applicable, entailing a lesser duty liability. The Tribunal remanded the matter to the original authority to consider this claim. The impugned order affirmed eligibility for the alternative notification, limiting duty to &8377; 5,06,253. The appeal of Revenue was dismissed as it did not contest the eligibility but solely argued that the claim was not made in the bill of entry.

Interest and Penalty Dispute:
The impugned order dropped the interest under section 28AA of Customs Act, 1962, but reinstated it under section 47(2) based on the plea of the importer. The penalty under section 112 was increased to &8377; 50,000. The importer contested the fine and penalty, arguing that enhancement without a challenge by Revenue was impermissible. The Tribunal held that penalty cannot be enhanced without proper notice, limiting the penalty to &8377; 15,000 and setting aside the interest liability.

Legal Framework and De Novo Proceedings:
The Tribunal considered the legal framework and the de novo proceedings. The judgment analyzed the implications of the show cause notice, the claim for alternative exemption notification, and the assessment of duty liability. It was noted that the Tribunal's earlier order did not explicitly address the inclusion of the alternative claim in the bill of entry. The decision emphasized the importance of proper assessment and adherence to statutory provisions in adjudicatory proceedings.

Conclusion:
The impugned order was modified to set aside the interest liability and limit the penalty to &8377; 15,000. The appeal of Revenue was dismissed, emphasizing the need for proper assessment and adherence to legal principles in customs adjudication proceedings.