2009 (11) TMI 449 - AT - Customs

Penalty- There is no dispute that the respondents had wrongly claimed the exemption available to software as there was no software separately imported and cleared. Adjudicating allegations of mis-declared with intent to evade payment of duty, the original authority demanded differential duty of Rs. 60,994/-, imposed equal amount of penalty under Section 114A of the Customs Act, 1962 (the Act) and ordered fine of Rs. 1,35,000/-. Vide the impugned order, the Commissioner (Appeals) reduced the fine to Rs. 75,000/- and penalty to Rs. 30,000/-. Held that- even considering the value of the entire goods imported, the fine of Rs. 75,000/- imposed by the Commissioner (Appeals) is reasonable. The authorities have not shown that the offending goods would have fetched a profit of Rs. 1,35,000/- were the goods sold in the market. The appeal of the Revenue as regards the fine is therefore dismissed.

Summary

Issues:
1. Mis-declaration of imported goods
2. Imposition of penalty under Section 114A of the Customs Act, 1962
3. Reduction of fine by the Commissioner (Appeals)

Analysis:

Issue 1: Mis-declaration of imported goods
The case involved the import of barcode print consignments by M/s. Protocol Solutions Pvt. Ltd., where part of the hardware was mis-declared as software, leading to an evasion of duty amounting to Rs. 60,994. The original authority imposed a differential duty and penalties, which were contested by the Revenue.

Issue 2: Imposition of penalty under Section 114A
The Tribunal found that the impugned goods were liable to confiscation under Section 111(m) of the Customs Act, and the original authority had rightly imposed a penalty equal to the duty evaded under Section 114A. The Commissioner (Appeals) erred in reducing the penalty, as Section 114A explicitly provides for a penalty equal to the duty evaded. Therefore, the appeal against the reduction of penalty was allowed.

Issue 3: Reduction of fine by the Commissioner (Appeals)
Regarding the reduction of fine from Rs. 1,35,000 to Rs. 75,000 by the Commissioner (Appeals), it was noted that the fine was reasonable considering the value of the offending goods and the submissions made by the respondents. The authorities failed to demonstrate that the goods would have yielded a profit of Rs. 1,35,000 if sold in the market. Hence, the Tribunal dismissed the Revenue's appeal against the fine reduction, affirming the decision of the Commissioner (Appeals).

In conclusion, the appeal was partially allowed, with the Tribunal upholding the imposition of penalty equal to the duty evaded under Section 114A while affirming the reduction of the fine by the Commissioner (Appeals) to Rs. 75,000 as reasonable.