2024 (12) TMI 800 - AT - Customs

Seeking waiver of penalty u/s 114 A of Customs Act - Liability of the present appellants for differential custom duty jointly and severally with another party - duty is payable by M/s. BGH Exim Ltd (seller of goods) which has already been paid and the case has been settled under settlement Commission - undervaluation of goods by BGH by bifurcating the value of imported goods - HELD THAT - From plain reading of the Section, it is clear that penalty under Section 114 A can be imposed only when the duty is payable. As per the facts of the present case, firstly, as per the impugned order the duty is payable by M/s. BGH Exim Ltd which has already been paid and the case has been settled under settlement Commission. Secondly, the demand in the show cause notice was proposed jointly and severally on M/s. BGH Exim Ltd as well as the present appellants. As per the settled legal position, duty cannot be demanded jointly and severally and in the facts of the present case the duty was confirmed only against M/s. BGH Exim Ltd. Therefore, there is absolutely no reason to impose penalty under Section 114A. The penalties set aside - appeal allowed.

Summary

Issues:
1. Imposition of penalty under Section 114A of Customs Act on the appellant.
2. Liability of the present appellants for differential custom duty jointly and severally with another party.
3. Interpretation of Section 114A of the Customs Act regarding the imposition of penalty.

Analysis:

1. The case involved the imposition of a penalty under Section 114A of the Customs Act on the appellant. The appellant had purchased goods on high sea sale from a company that was later found to have undervalued the goods. The department demanded differential custom duty from both the company and the appellant. The appellant contested the penalty under Section 114A, arguing that the duty had been paid by the company and the case settled, making the penalty unjustified. The tribunal, after considering the submissions, set aside the penalties imposed on the appellant, citing that the duty was confirmed only against the company, not the appellant.

2. The issue of liability of the present appellants for the payment of differential custom duty jointly and severally with another party was raised. The appellant argued that as per settled legal position, duty cannot be demanded jointly and severally. The duty was confirmed only against the other party, and not the appellant. The tribunal agreed with this argument and found no basis for imposing the penalty under Section 114A on the appellant.

3. The interpretation of Section 114A of the Customs Act was crucial in this case. The section allows for the imposition of a penalty for short-levy or non-levy of duty in certain cases. However, the penalty can only be imposed when the duty is payable. In this case, the duty was confirmed against the other party, who had paid it and settled the case. The tribunal emphasized that the duty cannot be demanded jointly and severally, and since the duty was not payable by the appellant, there was no basis for imposing the penalty under Section 114A. As a result, the tribunal set aside the penalties imposed on the present appellants and allowed the appeals with consequential relief.