In a recent case, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that an appeal cannot be rejected stating non-compliance under Section 129E of the Customs Act, 1961.The Tribunal set aside the impugned order to the extent of holding that computation of penalty under Section 114A would include both demand and interest.
Varman Aviation Private Limited, the appellant, filed these two appeals against a common order passed by the Commissioner of Customs (Appeals), Bangalore. The advocate for the appellant has submitted that Commissioner (A) had dismissed their appeal for non-compliance with the provisions of Section 129E of the Customs Act, 1962.
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The advocate has submitted that, aggrieved by the order-in-original, two appeals were filed before Commissioner (A), one by the appellant and another by the Revenue. The Commissioner (A) had directed to make a pre-deposit of Rs. 35/- lakhs against the total liability of Rs.24,81,500/- with an equivalent penalty. Aggrieved by the said order, they filed a Writ Petition before the High Court of Karnataka.
Later, given amendments made to Section 129E of the Customs Act, 1962, with effect from 16.09.2014, they withdrew their petition before the High Court and approached the Commissioner (A) by filing a modification application in the light of the amendment of the provisions with effect from 16.09.2014. Consequently, they filed a modification application; however, the Commissioner (A) did not consider the same and rejected the appeal on the ground of noncompliance with Section 129E of the Customs Act, 1962. He further submitted that before this Tribunal, they have complied with the provisions of Section 129E and hence, the present appeal.
The Commissioner (A) has not considered the issue on merit but dismissed the appeal on the ground of non-compliance with the provisions of Section 129E of the Customs Act, 1962. that against the duty amount of Rs.24,81,500/-, the appellant had already made a pre-deposit of Rs.2,48,150/- before this Tribunal. Therefore, the appellant has complied with the provisions of Section 129E of the Customs Act, 1962. Hence, the matter needs to be remanded to the Commissioner (A) to decide the issue on merit.
The two member bench of Dr. D.M. Misra, Member (Judicial) And R. Bhagya Devi, Member (Technical) found that the issue is pending for more than 10 years, therefore, a timeframe is necessary for disposal of the appeal. The Tribunal directed the Commissioner (A) to decide the issue on merit within a period of three months from the date of communication of this order.
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The Commissioner (A) had observed that the penalty under Section 114A should be equivalent to the total differential duty demanded and interest. The advocate submitted that it is contrary to the principles of law laid down by the High Court of Karnataka in the case of Commissioner of Central Excise vs. Sony Sales Corporation which has been consistently followed by the Tribunal in a series of cases.
The Tribunal set aside the impugned order to the extent of holding that computation of penalty under Section 114A would include both demand and interest. The Tribunal allowed the appeal by way of remand to the Commissioner (A).
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