2024 (7) TMI 1120 - AT - Customs

SCN for confiscation of goods imported - invocation of penalty u/s 114A of CA - import duty of fresh apples paid by way of scrips issued under the Focused Market Scheme (FMS), Focused Product Scheme (FPS) and Vishesh Krishi Gram Udyog Yojna (VKGUY) by DGFT - suppression of facts - time limitation - HELD THAT - There is nothing on record to suggest any culpability on the part of the appellant for having debited the duty through scrips. It is common knowledge that such duty payment debits are required to be endorsed by the officers concerned. There are no justification for issuance of the show cause notice to the appellant under section 28(4) of the Customs Act invoking suppression and the larger period of limitation. It is on record that the appellant had voluntarily paid duty in cash along with interest, even prior to issuance of the show cause notice dated 10.04.2015. When both the Revenue officials as well as their own assessing system - the EDI, had accepted the initial debit of duty through scrips, which subsequently was made good in cash along with interest, the law itself provided for no show cause notice to be issued in terms of the provisions of said section 28 itself. There are no justification in the department s action, seeking to impose penalty, on the appellant in the aforesaid matter. It is imperative that to invoke larger period of limitation, intention to evade payment of duty need to be shown and fraud, suppression or misstatement etc. need to be expressly proven. None of these elements are noticeable in the matter - The department therefore cannot affix the blame for their own omissions on the importer, particularly so when it is established from records that no sooner the anomalous situation was brought to the notice of the appellant importer by the DRI, all duty payments were promptly made in cash along with interest. For reasons foregoing, we find no merits in the orders of the lower authority imposing penalty on the appellant under Section 114A, initially for an amount of Rs.23.00 Lakh and then subsequently enhancing it by way of corrigendum dated 14.12.2016 to Rs.1,72,61,089.00. The order of the lower authority holding the imported goods liable to confiscation and imposition of penalty under section 114A is set aside - Appeal allowed.

Summary

Issues:
- Appellants challenging Order-in-Original
- Duty payment through duty credit scrips
- Alleged irregularity in duty payment
- Show cause notice for confiscation and penalty
- Justification for penalty imposition
- Interpretation of Customs Act, 1962
- Imposition of penalty under Section 114A

Detailed Analysis:

The Appellate Tribunal heard the appeal filed by the Appellants against the Order-in-Original dated 02.12.2016, which imposed penal liabilities and confirmed duty demand. The case involved the import of twelve consignments of fresh apples, with duty paid using duty credit scrips under various schemes. The Directorate of Revenue Intelligence (DRI) later contested the duty payment, stating that the consignments were not covered under the duty scrips. The Appellant argued that all relevant documents were submitted for assessment, and the duty was debited against the scrips with no irregularities initially noted. The Appellant voluntarily paid the duty amount in cash along with interest upon realizing the issue, even before any show cause notice was issued for confiscation and penalties.

The Tribunal found no evidence of culpability on the Appellant's part in debiting the duty through scrips. It noted that the duty payment debits should have been endorsed by the concerned officers, and since both the Revenue officials and the Electronic Data Interchange (EDI) system accepted the initial duty debit through scrips, followed by the cash payment with interest, no show cause notice should have been issued under section 28(4) of the Customs Act. Section 28(2) of the Customs Act, 1962, required informing the proper officer of duty payment, after which no notice for penalty could be served, which the Appellant had complied with.

The Tribunal emphasized that imposing penalties required proof of intent to evade duty payment, fraud, suppression, or misstatement, none of which were evident in this case. The Appellant admitted the initial payment was due to ignorance, which was also acknowledged by the department. The Tribunal held that it was the department's responsibility to identify anomalies during assessment, which was not done in this instance. Therefore, the Tribunal found no merit in the lower authority's decision to impose penalties under Section 114A, which were initially set at Rs.23.00 Lakh and later increased to Rs.1,72,61,089.00 through a corrigendum.

In conclusion, the Tribunal set aside the lower authority's order confiscating the imported goods and imposing penalties under section 114A, ruling in favor of the Appellant. The appeal was successful in this regard.