2018 (3) TMI 288 - HC - Customs

Payment made under protest - extended period of limitation - penalty - Held that - There is a concurrent finding of fact of mis-declaration of the value, and consequently, Section 111 (m) of the Customs Act, gets attracted. Section 112 of the Customs Act which provides for penalty follow. Though CESTAT was empowered to impose a penalty, not exceeding the value of the goods of ₹ 5,000/-, whichever is greater, in the case on hand, considering the quantum of penalty of ₹ 10,00,000/- on the assessee, CESTAT has reduced the same to ₹ 5 lakhs. The appellant has not made out a case for interference and substantial question of law raised is answered against the assessee - appeal dismissed.

Summary

Issues:
1. Interpretation of payment made under protest in light of Supreme Court ruling.
2. Imposition of penalty when demand was set aside and extended period of limitation was not invocable.

Issue 1:
The appellant, engaged in manufacturing automotive instruments, imported items without including the value of design, drawings, and technical information in the assessable value. The department issued a show cause notice alleging suppression of facts and invoking extended period of limitation. The Commissioner imposed a penalty and appropriated the payment towards the demand. The Tribunal reduced the penalty but the appellant contested the remaining penalty amount. The appellant argued that the payment made during the investigation stage amounted to payment under protest, citing a Supreme Court ruling. The Tribunal held that the penalty under Section 112 of the Customs Act was justified due to misdeclaration of value, attracting confiscation under Section 111 (m).

Issue 2:
The appellant contended that the misdeclaration of value was a mistake, not intentional. The revenue argued that misdeclaration of value automatically triggers Section 111 of the Customs Act for confiscation and Section 112 for penalty. The Tribunal acknowledged that the extended period of limitation was not applicable for demanding duty but upheld the penalty under Section 112 due to admitted misdeclaration of value. The Tribunal reduced the penalty from ?10,00,000 to ?5,00,000 considering the circumstances. The Court noted that the appellant failed to make a case for interference, confirming the misdeclaration of value and the penalty imposed. The Court dismissed the appeal, upholding the penalty imposed by the Tribunal.

This judgment clarifies the interpretation of payment made under protest and the imposition of penalty in cases of misdeclaration of value under the Customs Act. The Court upheld the penalty imposed on the appellant for misdeclaration of value, despite setting aside the duty demand and finding the extended period of limitation inapplicable. The appellant's argument of the misdeclaration being a mistake was not accepted, and the penalty under Section 112 was deemed justified. The Court affirmed the Tribunal's decision to reduce the penalty amount, ultimately dismissing the appeal and upholding the penalty imposed on the appellant.