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2025 (1) TMI 1461 - AT - CustomsWaiver of penalty imposed upon the appellant u/s 114A and 114AA of the Customs Act 1962 - appropriation of deposit made by the appellant towards the duty demand that has been confirmed - HELD THAT - The Commissioner has expressed concerns in the impugned order as to why Raj Kumar Pal had appeared before the authorities after he had substantially defrauded the appellant and as to why the appellant lodged a police complaint instead of a First Information Report and as to why the appellant had not instituted a civil suit against Raj Kumar Pal for recovery of the amount. The Commissioner for these reasons concluded that the appellant had deliberately and in a very systematic and planned manner arranged to submit doctored and forged documents to evade payment of customs duties and Raj Kumar Pal was a dummy planted by the appellant. It is for this reason that the Commissioner imposed penalties upon the appellant under sections 114A and 114AA of the Customs Act. Such a finding has been recorded by the Commissioner on the basis of conjectures and surmises. There is nothing on record to indicate that the appellant and Raj Kumar Pal had colluded. The fact that the appellant had paid the correct amount of duty to Raj Kumar Pal through banking channels does not support the finding recorded by the Commissioner. Raj Kumar Pal clearly stated in his statement before the customs authorities that he had received the correct amount from the appellant but for his own gains he paid a reduced amount. The appellant has deposited the differential amount of duty with interest. Section 114A of the Customs Act provides that where the duty has been short paid for reason of collusion or any willful statement or suppression of facts the person who is liable to pay duty shall be liable to pay the penalty equal to the duty - In the absence of any collusion or any willful mis-statement or suppression of facts by the appellant penalty under section 114A could not have been imposed upon the appellant. Penalty under section 114AA of the Customs Act is imposed if a person knowingly makes signs or uses or causes to be made signed or used any declaration is false or incorrect in any material particular in the transaction of any business for the purposes of the Customs Act shall be liable to a penalty not exceeding five times the value of goods - The appellant had not submitted any Bills of Entry. They were submitted by Raj Kumar Pal. The appellant also had no knowledge that any incorrect statement was made by Raj Kumar Pal. Penalty could not have been imposed upon the appellant under section 114AA of the Customs Act. It is not in dispute that the appellant had deposited the entire amount of duty with interest. This fact has also been noted by the Commissioner but this amount has not been appropriated. This amount is therefore required to be appropriated against the demand of duty that has been confirmed. Conclusion - i) Penalties under Sections 114A and 114AA require evidence of collusion or willful mis-statement which was absent in this case. The penalties imposed under Sections 114A and 114AA were set aside. ii) An appellant s liability for duty does not automatically imply liability for penalties without evidence of intent or knowledge of fraudulent activities. The amount deposited by the appellant should be appropriated towards the duty demand. Appeal allowed.
The judgment involves an appeal filed by M/s Spectro Lab Equipments Private Limited against an order by the Commissioner of Customs, which confirmed a demand for duty under Section 28(4) of the Customs Act, 1962, along with interest and penalties under Sections 114A and 114AA of the Customs Act. The appellant sought to set aside the penalties and requested that their deposit be appropriated towards the confirmed duty demand.
Issues Presented and Considered: The core legal issues considered in this judgment include:
Issue-wise Detailed Analysis: Legal Framework and Precedents: The relevant legal provisions are Sections 28(4), 28AA, 114A, and 114AA of the Customs Act. Section 28(4) addresses the recovery of duties not levied or short-levied, while Section 28AA deals with interest on such duties. Section 114A imposes penalties for short-levy or non-levy of duty due to collusion or willful mis-statements, and Section 114AA penalizes the use of false or incorrect material. Court's Interpretation and Reasoning: The Tribunal examined the circumstances under which the appellant engaged Raj Kumar Pal as their Clearing and Forwarding Agent. It was noted that Raj Kumar Pal admitted to forging documents and mis-declaring import values without the appellant's knowledge. The Tribunal found no evidence of collusion or willful mis-statement by the appellant, which is a requisite for penalties under Section 114A. Key Evidence and Findings: The Tribunal considered the statements of Raj Kumar Pal, who admitted to the fraud, and the appellant's actions, including filing a police complaint and depositing the differential duty with interest. The evidence did not support the Commissioner's finding of collusion between the appellant and Raj Kumar Pal. Application of Law to Facts: The Tribunal applied Sections 114A and 114AA to the facts, concluding that the appellant neither colluded with Raj Kumar Pal nor had knowledge of the fraudulent actions. Therefore, the penalties under these sections were not applicable. Treatment of Competing Arguments: The appellant argued that they were victims of Raj Kumar Pal's fraud and had taken reasonable steps to address the issue, including making duty payments. The Department contended that the appellant's actions indicated complicity. The Tribunal found the appellant's arguments more compelling, given the lack of evidence for collusion. Conclusions: The Tribunal concluded that the penalties under Sections 114A and 114AA were unjustified and should be set aside. The appellant's deposit should be appropriated towards the confirmed duty demand. Significant Holdings: Core Principles Established:
Final Determinations on Each Issue:
The appeal was allowed to the extent that the penalties were set aside, and the appellant's deposits were to be appropriated towards the confirmed duty demand.
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