2022 (12) TMI 622 - AT - Customs

Levy of penalty u/s 114AA and u/s 12(a) (ii) (b) (ii) - importer wrongly claimed the benefit of exemption notification - mis-declaration of the Retail Sales Price RSP of the imported good s - HELD THAT - a new plea of change of classification to CTH84714190 is raised by the learned counsel before us which was neither raised before the Principal Commissioner nor was it considered in the impugned order. This claim of classification is significant as, according to the learned counsel, the tariff rate for the Basic Customs Duty itself will be NIL and the exemption notification in dispute becomes irrelevant. It is also significant because of the claim of the learned counsel that goods falling under CTH 84714190 are not covered by Section 3A of the Central Excise Act read with the Legal Metrology Rules and therefore, Additional Duty of Customs does not have to be determined as per the RSP. If it is so, then the allegation of misdeclaration of RSP will require re-examination. Additional Duty of Customs may also have to be re-determined. Consequently, it needs to be examined if the confiscation, fine, penalty, etc. still survive. We are of the considered view that the Principal Commissioner should get an opportunity to examine this claim for classification under CTH 84714190 which the appellant has now made and the consequential effects on demand of duty, effect of alleged mis-declaration of RSP, confiscation, fine, penalty, etc. Matter restored back.

Summary

Issues:
1. Challenge to the order passed by the Principal Commissioner of Customs (Imports) regarding differential duty demand, fine, and penalties imposed on the importer.
2. Appeal against the penalty imposed on the Managing Director of the importer.
3. Claim of misdeclaration of Retail Sales Price (RSP) and wrongful benefit claimed under a notification.
4. Appeal for reclassification of imported goods under a different Customs Tariff Heading (CTH).
5. Impact of revised classification on duty, misdeclaration allegations, confiscation, and penalties.

Analysis:

Issue 1:
The appellant importer challenged the order passed by the Principal Commissioner of Customs, which confirmed a differential duty demand, imposed fines, and penalties under various sections. The dispute arose from the alleged misdeclaration of RSP and wrongful benefit claimed under a notification. The goods involved were LED displays for ADP machines, and the differential duty was confirmed due to the incorrect availing of an exemption notification for basic customs duty. The impugned order also highlighted the misdeclaration of RSP, leading to higher prices than declared. The extended period of limitation, liability of goods to confiscation, and penalties were also addressed.

Issue 2:
A separate appeal was filed by the Managing Director of the importer to challenge the penalties imposed under different sections. The penalties included a significant amount under section 114AA and others. The appeal specifically targeted the penalties imposed on the Managing Director individually.

Issue 3:
The dispute centered around the misdeclaration of RSP and the wrongful claim of benefits under a specific notification. The appellant importer sought to contest these allegations and their implications on the duty demand, fines, and penalties imposed. The goods in question were identified as LED displays for ADP machines, with discrepancies in the declared RSP leading to the differential duty demand.

Issue 4:
An additional plea was made by the importer to reclassify the imported goods under a different Customs Tariff Heading (CTH). The reclassification under CTH 84714190 was proposed, which would impact the duty calculation and the applicability of exemptions. The reclassification plea aimed to nullify the need for the exemption notification and address the misdeclaration issues related to RSP.

Issue 5:
The revised classification under CTH 84714190 would have significant implications on the duty calculation, misdeclaration allegations, confiscation, fines, and penalties. The reclassification would alter the duty structure and potentially eliminate the need for exemptions and penalties based on the original classification. The reexamination of the misdeclaration of RSP and the duty calculation methodology would be crucial in determining the revised liabilities.

In conclusion, the Tribunal allowed both appeals by remanding the matter to the Principal Commissioner for a thorough examination of the reclassification claim under CTH 84714190 and its implications on duty, misdeclaration allegations, confiscation, fines, and penalties. The revised classification could potentially alter the entire assessment and liabilities associated with the imported goods, necessitating a detailed review by the Principal Commissioner.