2019 (4) TMI 38 - AT - Customs

Valuation - gold jewelry - price-revision clause - difference between the value of the import and the amounts paid for the exports - demand of differential customs duty, interest thereof and also for imposition of penalties u/s 114A and 114AA of the Customs Act, 1962 - Held that - There is no dispute as to the enhanced value as accepted by the appellant and informed the Departmental Authorities on 22.12.2014 24.12.2014. The demand of the differential duty is also the same as is the amount paid by the appellant along with the interest - there is no dispute on differential duty and interest thereof and has been paid of, there being challenge by the appellant in the appeal that portion of the impugned order is upheld. Penalty u/s 114A of the Customs Act, 1962 - Held that - In the case in hand, there is no dispute as to the fact that appellant themselves have come forward and informed the Department on 22.12.2014 and 24.12.2014 that there was a mis-declaration of the value on the gold jewelry imported and paid of the differential duty along with interest - the explanation put forth on behalf of the appellant that they were confused by the master circular of the Reserve Bank of India is acceptable and the penalty under Section 114A of the Customs Act, 1962, and there seems to be no suppression of facts with intent to evade tax; is unwarranted and needs to be set aside. Penalty u/s 114AA of the Customs Act, 1962 - Held that - The appellant in this case has not declared the relationship between him and the exporter in the declaration which supposed to be filed that the authorities with the importing the consignment may be due to oversight. Definitely there is a lapse on the part of the appellant and penalty under Section 114AA gets attracted, however, since in the case in hand, the appellant came forward on his own and discharged of duty liability with interest, a lenient view is taken, penalty under Section 114AA is reduced the same to ₹ 5 lakhs. The penalty imposed under Section 114A is set aside and penalty under Section 114AA is reduced to ₹ 5 lakhs - appeal allowed in part.

Summary

Issues:
Penalties under Section 114A and 114AA of the Customs Act, 1962

Analysis:
The appellant imported gold jewelry, declared value at unfixed prices, and sold them to local customers. Discrepancies were found between the import value declared and the amounts paid to the exporters. The appellant informed the Customs Department about the difference, paid the customs duty along with interest, and requested no show cause notice for penalty. However, a show cause notice was issued, leading to penalties under Sections 114A and 114AA. The Adjudicating Authority upheld the duty liability, penalties, and enhanced the declared value based on the agreed price with the exporter.

The appellant contested only the penalties, arguing that they promptly rectified the discrepancy upon being informed by their bankers. They highlighted that they did not opt for provisional assessment, rectified the lapse of declaration, and sought condonation from the Reserve Bank of India, which was granted. The appellant cited a High Court judgment and RBI circulars to support their case for setting aside the penalties.

The Departmental Representative argued that the penalties were correctly imposed as the appellant did not declare the relationship with the exporter and the declared prices were not applicable to gold jewelry. They contended that the penalties under Sections 114A and 114AA were justified based on the non-disclosure and misdeclaration.

The Tribunal found that the appellant had rectified the discrepancy voluntarily upon being informed by the authorities. The penalties under Section 114A were set aside as there was no willful misstatement or suppression of facts to evade tax. However, a penalty under Section 114AA was reduced due to the lapse in declaring the relationship with the exporter, despite the appellant rectifying the duty liability promptly.

In conclusion, the penalties under Section 114A were set aside, and the penalty under Section 114AA was reduced to ?5 lakhs. The Tribunal disposed of the appeal based on the findings and circumstances of the case.