2025 (1) TMI 437 - AT - Customs

Demand of interest for the delayed payment of SAD - imposition of penalties - HELD THAT - Section 3(12) of CTA provides that the provisions of the Customs Act, 1962 and the rules and regulations made there under, including those relating to drawbacks, refunds and exemption from duties shall apply in relation to the duties leviable under that Act. By citing this provision, the appellant-importer has claimed that there is no provision in CTA, including Section 3 thereof, for levy of interest and penalty for non-payment / delayed payment of SAD - When there is a delay in payment of SAD, interest is automatically liable to be paid as per Section 28AB of Customs Act, 1962, which is applicable in this case. Accordingly, the interest has been rightly demanded in the impugned order. Accordingly, the interest already paid appropriated by the appellant-importer against their interest liability confirmed in the impugned order. Penalties have been imposed under Sections 114A and 114AA of the Customs Act, 1962 - HELD THAT - The appellant-importer were under the bona fide belief that SAD was exempted for the raw sugar was available even after April 8, 2011 and filed the bills of entry claiming the exemption. If the exemption was not available to them, the Customs authorities should have pointed out the same. Instead, we observe that the Bills of Entry filed by the appellant-importer were cleared without raising any query by the officers. Thus, the appellant-importer cannot be held responsible for the delay in payment of SAD. Further, we observe that Section 114A provides for imposition of penalty for short levy or non-levy or short payment or non-payment of duty by the reason of collusion or any wilful misstatement or suppression of facts. In this case, it is observed that there is no wilful misstatement or suppression of fact on the part of the appellant and hence the primary condition precedent for invoking Section 114A are absent. Accordingly, the penalties imposed on the appellant-importer under Sections 114A and 114AA of the Customs Act, 1962 are not sustainable and hence the same is set aside. Confiscation of the goods imported - HELD THAT - All the Bills of entry were cleared after obtaining due permission from the jurisdictional Customs authorities. The customs authorities at Kolkata/Haldia initiated the instant proceeding against the appellant-importer only after issue of the Alert Notice dated April 10, 2013 by the Kandla Customs authorities asking all Customs formations in the country, including the respondent, to levy 4% SAD on the plea that exemption from SAD was no longer available. Thus, the goods imported by the appellant-importer and cleared after obtaining due permission from the proper officers are not liable for confiscation. Penalty imposed on the CHA, M/s. J.M. Baxi Co. - HELD THAT - It is observed that they have filed the bills of entry as per the documents furnished by the appellant-importer. They have been filing Bills of Entry for importing raw sugar prior to April 2011, by claiming the exemption as provided under the Notification No. 12/2012-Cus (Serial No. 76, condition 3A), without payment of SAD for the period prior to April 8, 2011. They continued to file the Bills of Entry by claiming the same exemption even after April 2008. If the exemption was not available to them, then the Customs authorities should have pointed out the same and raised the query. Instead, we observe that the Bills of entry filed by the CHA were cleared without raising any query by the officers. Thus, the appellant-CHA cannot be held responsible for the wrong claim of the benefit of the exemption as provided under the Notification No. 12/2012-Cus. Accordingly, the penalty imposed on the CHA under Section 112(a)(ii) of the Act is not sustainable and hence, the same is set aside. The ld. adjudicating authority could not find any valid reason for imposing penalty on the said five persons of the company and hence dropped the proceedings against the said officials. There are no infirmity in the impugned order dropping the proceedings against the said persons. Conclusion - The appellant-importer is liable to pay interest for the delay in payment of SAD. The interest already paid by the appellant-importer is appropriated against this liability. The goods imported by the appellant-importer are not liable for confiscation. The penalty imposed on the appellant-importer under Sections 114A and 114AA of the Customs Act, 1962 is set aside. The penalty imposed on the CHA under Section 112(a)(ii) of the Customs Act, 1962 is set aside. All the appeals are disposed of.

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily addresses the following legal issues:

• Whether the appellant-importer is liable to pay interest for the delayed payment of Special Additional Duty (SAD) under the Customs Tariff Act, 1975.
• Whether penalties imposed under Sections 114A and 114AA of the Customs Act, 1962, on the appellant-importer are sustainable.
• Whether the goods imported by the appellant-importer are liable for confiscation.
• Whether the penalty imposed on the Customs House Agent (CHA), M/s. J.M. Baxi & Co., under Section 112(a)(ii) of the Customs Act, 1962, is justified.
• Whether the proceedings against five officers of the appellant-importer, which were dropped, should be reinstated as per the Revenue's appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Interest on Delayed Payment of SAD

• Relevant Legal Framework and Precedents: The appellant-importer argued that there is no provision in the Customs Tariff Act, 1975, for levying interest on delayed payment of SAD. They referenced Section 3(12) of the CTA, which applies provisions of the Customs Act, 1962, to duties under the CTA.
• Court's Interpretation and Reasoning: The court interpreted Section 3(12) as an inclusive provision, making the Customs Act's interest provisions applicable to SAD. The court held that interest is automatically liable under Section 28AB of the Customs Act, 1962.
• Conclusion: The court upheld the demand for interest on delayed payment of SAD and appropriated the interest already paid by the appellant-importer.

Penalties under Sections 114A and 114AA

• Relevant Legal Framework and Precedents: Penalties under Section 114A are applicable for short levy or non-payment of duty due to collusion or wilful misstatement. Section 114AA pertains to incorrect documentation.
• Court's Interpretation and Reasoning: The court found no wilful misstatement or suppression of facts by the appellant-importer. The issue was deemed interpretational, and the appellant-importer acted under a bona fide belief.
• Conclusion: The court set aside the penalties imposed under Sections 114A and 114AA.

Confiscation of Goods

• Relevant Legal Framework and Precedents: Confiscation is considered when there is intentional non-compliance with customs regulations.
• Court's Interpretation and Reasoning: The court observed that the appellant-importer cleared goods with due permission, and the proceedings were initiated only after an alert notice from Kandla Customs authorities.
• Conclusion: The court held that the imported goods were not liable for confiscation.

Penalty on CHA, M/s. J.M. Baxi & Co.

• Relevant Legal Framework and Precedents: Section 112(a)(ii) of the Customs Act deals with penalties for improper documentation.
• Court's Interpretation and Reasoning: The CHA filed bills of entry based on documents from the appellant-importer. The court noted that customs authorities did not raise queries at the time of clearance.
• Conclusion: The court set aside the penalty imposed on the CHA.

Proceedings Against Five Officers

• Relevant Legal Framework and Precedents: Penalties on individuals require evidence of personal involvement in the alleged customs violations.
• Court's Interpretation and Reasoning: The adjudicating authority found no basis for penalizing the officers, as they acted as employees of the company.
• Conclusion: The court upheld the decision to drop proceedings against the officers and rejected the Revenue's appeal.

3. SIGNIFICANT HOLDINGS

• Interest on SAD: "When there is a delay in payment of SAD, interest is automatically liable to be paid as per Section 28AB of Customs Act, 1962."
• Penalties under Sections 114A and 114AA: "There is no wilful misstatement or suppression of fact on the part of the appellant, and hence the primary condition precedent for invoking Section 114A are absent."
• Confiscation of Goods: "The goods imported by the appellant-importer and cleared after obtaining due permission from the proper officers are not liable for confiscation."
• Penalty on CHA: "The appellant-CHA cannot be held responsible for the wrong claim of the benefit of the exemption as provided under the Notification No. 12/2012-Cus."
• Proceedings Against Officers: "We do not find any infirmity in the impugned order dropping the proceedings against the said persons."

Final Determinations:

• The appellant-importer is liable for interest on delayed payment of SAD.
• Penalties under Sections 114A and 114AA on the appellant-importer are set aside.
• The imported goods are not subject to confiscation.
• The penalty on the CHA is set aside.
• The proceedings against the five officers are rightfully dropped.