The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that Benefit of section 28(5) Of Customs Act available when reduced penalty of 15% of BCD amount was paid within thirty days of receipt of Show Cause Notice ( SCN ).
The Appellant, Honda Cars India Limited had imported ‘drawings and designs on paper made with aid of computer’ and filed the Bills of Entry, claiming classification of the said goods under Customs Tariff Item ( CTI ) 4906 00 00. The appellant had also claimed the exemption from payment of Basic Customs Duty.
The officers of Directorate of Revenue Intelligence ( DRI ), initiated an investigation against the appellant in connection with importation of the subject goods. Accordingly the DRI had concluded that the imported goods should appropriately be classifiable under CTI 4911 99 20, instead of the classification claimed by the appellant under CTI 4966 00 00.
During the course of investigation, the appellant had admitted the fact that it had wrongly classified the imported goods and accordingly, had deposited an amount of Rs.1,70,89,364/- into the government exchequer towards the differential BCD and interest. Thereafter Show cause notice issued against the Appellant. The appellant had deposited an amount of Rs.26,58,857/- towards 15% penalty under Section 28(5) of the Customs Act, 1962.
Aggrieved with the impugned order, the appellant has preferred this appeal before the Tribunal.
Rachit Jain , Counsel for appellant submitted that the provisions of Section 114A Customs Act cannot be invoked for imposition of penalty inasmuch as non-payment of the BCD amount at the time of assessment was not owing to the reason of collusion or any wilful misstatement or suppression of facts.
Further, he submitted that since the reduced amount of penalty of 15% of the BCD amount was paid within thirty days from the date of receipt of the SCN, the benefit provided under Section 28(5) Customs Act should be available to the appellant and the impugned order, confirming equal amount of BCD as the quantum of penalty cannot be sustained.
Rakesh Kumar, Counsel for the department submitted that since the differential amount of BCD was paid during the course of investigation by the DRI, the appellant is exposed to the penal consequences provided under 114A of the Customs Act.
Further submitted that the benefit of payment of reduced amount of penalty in terms of sub-section (5) of Section 28 Customs Act should not be available to the appellant inasmuch as the reduced amount of penalty was not paid within the prescribed time frame of thirty days from the date of receipt of the SCN.
The tribunal relied upon the decision of Gujarat High Court in the case of Prakash Diamond Pvt. Ltd. Vs. Union of India observed that “if the last date of a period within which an act is to be performed is a holiday, then the last date would be extended to the immediate next working day and the act would be said to be in compliance, if the same is performed on the immediately next working day by invoking the provisions of Section 10 of the General Clauses Act.”
A Two-Member Bench comprising S.K. Mohanty, Member (Judicial) and P.V. Subba Rao (Technical Member) held that appellant would be liable to pay the reduced amount of penalty at the rate of 15%, which they have already complied with.
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