2016 (8) TMI 926 - AT - Customs

Imposition of penalty - Classification of imported goods - import of small quantity of housing by courier connectors housing made of plastics bonafide mistake on the part of courier agency to avail exemption in small quantity of import of housing immediate discharge of duty with interest on recognition Held that - Housing made of plastic is not eligible for exemption available to the connector s. However many of such small consignments have been cleared under claim for exemption. The appellant pleaded that it is a mistake on the part of courier to routinely claim of such exemption based on the description in the invoice. However, such claim of ineligible exemption has happened over a period in respect of many consignments. Even if it is agreed that the appellant missed to recognize wrong claim of exemption in their consignment, it is unacceptable that it can happen in respect of so many consignments penalty reduced to ₹ 10,000 decided partly in favor of appellant.

Summary

Issues:
1. Correctness of penalty imposed on the appellant for claiming ineligible exemption on imported goods.

Analysis:
The case involved an appeal against the order of the Commissioner (Appeals) regarding the imposition of a penalty on the appellant for claiming exemption on imported goods that were ineligible for such concession. The appellants were importers of 'connectors' eligible for exemption under a specific notification. However, investigations revealed that they were importing 'housing' made of plastics, which did not qualify for the exemption. The original authority confirmed a demand for differential duty and imposed a penalty of ?5 lakhs, which was reduced to ?1 lakh by the Commissioner (Appeals). The appellant contended that the error in claiming exemption was due to a mistake by their courier agent, and they had rectified the duty liability for past imports upon realizing the error. The appellant sought a total waiver of the penalty based on the bona fide nature of the mistake. The Revenue reiterated the findings of the impugned order.

Upon hearing both parties and examining the case records, the Tribunal focused on the correctness of the penalty imposed on the appellant. It was acknowledged that 'housing' made of plastic did not qualify for the exemption claimed as 'connectors'. The appellant attributed the mistake to their courier routinely claiming exemption based on the invoice description. However, the Tribunal noted that such ineligible exemption claims had occurred over multiple consignments, raising doubts about the appellant's oversight. Despite the appellant's acknowledgment and rectification of the duty liability for past imports, the Tribunal found it implausible that the error went unnoticed for numerous consignments. In light of the circumstances and the appellant's prompt action on recognizing the mistake, the Tribunal decided to reduce the penalty to ?10,000, emphasizing the importance of justice. The appeal was dismissed, except for the modification in the penalty amount.