2024 (10) TMI 1354 - AT - Customs

Levy of composite penalty under Section 112(a) and 112 (b) and Section 114 AA of the Customs Act, 1962 - importation of old and used car by mis declaring the same as new car and it is a case of under valuation also - HELD THAT - Admittedly in this case, it is a case of importation and penalty under Section 114 AA of the Customs Act can be imposed on account of fraudulent exports of the goods. In that circumstances, we hold that penalty under Section 114AA of the Customs Act cannot be imposed but in the impugned order penalty under Section 114 AA of the Act as proposed in the Show Cause Notice was also imposed but quantum penalty is not known. As the quantum of penalty imposed on under Section 112(a) and 112(b) are not known and penalty under Section 114AA is not imposable on the appellant therefore, it is held that composite penalties imposed on the appellant are not sustainable. Accordingly, penalties imposed in both the cases are set aside. The impugned orders qua imposing penalties under various provisions of the Customs Act, 1962 are set aside - Appeal allowed.

Summary

Issues:
- Imposition of composite penalty under various provisions of the Customs Act, 1962
- Validity of penalty under Section 114AA of the Customs Act

Analysis:
The judgment by the Appellate Tribunal CESTAT Kolkata dealt with the issue of imposing composite penalties on an appellant under different provisions of the Customs Act, 1962. The case involved a car dealer who imported two cars, declared them as new, but later investigations revealed that the cars were old and undervalued. The Adjudicating Authority imposed a penalty of Rs. 5 lakhs on the appellant under the Customs Act, 1962. The appellant challenged this penalty, arguing that penalty under Section 114AA cannot be imposed for importation, citing a previous Tribunal case. The Authorized Representative contended that the penalty was rightly imposed due to the misdeclaration and undervaluation.

The Tribunal considered the submissions and focused on whether a composite penalty could be imposed on the appellant under various provisions of the Customs Act, 1962, and whether penalty under Section 114AA could be applied. Referring to previous cases, the Tribunal held that penalty under Section 114AA was wrongly imposed as it was meant for fraudulent exporters, not importers. Additionally, the Tribunal cited a Gujarat High Court case to support the view that a composite penalty without demarcations is not sustainable. The Tribunal dismissed the Tax Appeal and set aside the composite penalties imposed on the appellant.

In conclusion, the Tribunal ruled that since the quantum of penalties under Section 112(a) and 112(b) was unknown and penalty under Section 114AA was not applicable to the appellant, the composite penalties imposed were not sustainable. Therefore, the penalties under various provisions of the Customs Act, 1962 were set aside, and the appeals were allowed.