2019 (11) TMI 452 - AT - Customs

Enhancement of penalty - Section 112 (a) of the Customs Act, 1962 - import of different type of Catheters - Drugs or not - imoprt of Catheter through Trivandrum Airport - designated airport or not - N/N. 1468 E dated 06.10.2005 - Whether there was any mis-declaration of description of goods in the bills of entry or not? - HELD THAT - The appellant has been regularly importing the Catheter from the Trivandrum Airport during the period 23.11.2005 to 17.03.2011 and has been paying Customs Duty and no objection was raised by the Department during these six years regarding any violation made by the appellant. Further, the N/N. 146 E dated 06.10.2005 issued by the Department of Health was not in the knowledge of the appellant as well as the Customs officials and no objection was raised against the appellant. Subsequently, after the expiry of six years, a SCN dated 06.08.2011 was issued proposing confiscation of the goods imported under 111 Bills of Entry mentioned therein and also proposing penalty under Section 112 and 117 of the Act - the Original Authority after considering the submissions of the appellant has observed that there was no mis-declaration on the part of the appellant while filing the Bill of Entry and that finding has not been disturbed even by the Commissioner (A). Extended period of Limitation - HELD THAT - The Department issued another SCN No.21/2010 dated 23.07.2010 demanding short payment of duty on certain items but in the said SCN also, no allegation was made that the appellant is not entitled to import through Trivandrum Airport - Once the Customs authorities has come to the conclusion that there is no mis-declaration and there is no suppression of facts by the appellant in filing the Bill of Entry which was accepted by the Department, then invoking the extended period of limitation is not justified because there was no intention to evade payment of duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Modification of penalty under Section 112(a) of the Customs Act, 1962.
2. Allegations of mis-declaration and illegal imports.
3. Knowledge of Notification No. 1468 E dated 06.10.2005.
4. Enhancement of penalty from &8377; 5,55,000/- to &8377; 15,00,000/-.
5. Barred by limitation and suppression of facts.
6. Justification of penalty imposition.

Analysis:

1. The appeal challenged the modification of penalty under Section 112(a) of the Customs Act, 1962, from &8377; 5,55,000/- to &8377; 15,00,000/- by the Commissioner (Appeals). The appellant, a regular importer of Surgical Instruments, faced allegations of mis-declaration and illegal imports, leading to the penalty enhancement.

2. The appellant imported Catheters through Trivandrum Airport, unaware of the Notification No. 1468 E dated 06.10.2005, which classified Catheters as Drugs under the Drugs and Cosmetics Act, 1940. Despite no objection raised by Customs during six years of import, a subsequent show cause notice (SCN) in 2011 alleged mis-declaration and illegal imports, resulting in the penalty imposition.

3. The appellant argued against the penalty, citing no mis-declaration found in Bill of Entry, and Customs' lack of objection during previous imports. The imposition of penalty without just cause, especially after the extended period from the appeals' filing, raised concerns about justification and legality.

4. The Tribunal found the penalty imposition unjustified, considering the appellant's regular compliance, lack of mis-declaration, and Customs' historical acceptance of imports. The enhancement lacked legal basis and reasoning, leading to the appeal's allowance and the impugned order's setting aside.

5. The judgment highlighted the importance of factual appreciation, absence of intent to evade duty, and Customs' consistent acceptance of imports. The penalty's enhancement lacked legal standing, leading to the appellate tribunal's decision to overturn the Commissioner's order.

6. Ultimately, the tribunal's decision emphasized the necessity for legal justification in penalty imposition, especially when based on historical compliance and lack of mis-declaration. The appeal's success rested on the lack of legal grounds for penalty enhancement, ensuring fairness and adherence to statutory provisions.

Conclusion:
The judgment focused on the legality and justification of penalty imposition, highlighting the importance of factual evidence, historical compliance, and legal reasoning in such decisions. The appellate tribunal's decision to set aside the enhanced penalty underscored the need for proper legal basis and justification in imposing penalties under the Customs Act, 1962.