The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed penalty imposed on acceptance of classification and prompt payment of customs duty along with penalty before the issuance of show cause notice ( SCN ).
The importer in their letter stated that earlier also they had classified items wrongly and accordingly, differential duty with interest was paid. The appellant had not disputed the classification of the products under Chapter Heading 9016 and 8423, accepting the classification as decided by the department the differential duty along with interest was paid. But however, the Respondent alleging suppression of facts to evade payment of duty, imposed penalty under Section 114A of the Customs Act, 1962.
The Original Authority had also given an option to pay the penalty, if the amount is paid within 30 days from the date of communication of the order. Against this order, an appeal was filed before the Commissioner ( Appeals ) stating that they are not disputing and challenging the differential duty.
As they had already paid the entire duty along with interest, they requested for consideration of the benefit under Section 28(2B) for waiver of penalty. It was submitted that since complete description of the goods was provided, suppression intended to evade payment of duty cannot be alleged and accordingly, penalty need to be set aside which was rejected by the Commissioner ( Appeals ) and hence, the appeal was filed before the Tribunal.
The counsel on behalf of the appellant submitted that in the Bills of Entry though the Chapter Heading was wrongly mentioned but the description of the product was correctly stated as parts of weighing equipment; hence, the department cannot allege that the description was suppressed or mis-declared.
The Authorised Representative for the Revenue reiterating the findings of the authorities submitted that penalty under Section 114A was rightly invoked inasmuch as the demand is under proviso to section 28(1).
Setting the imposition of penalty, a Two-Member Bench comprising PA Augustian, Judicial Member and R Bhagya Devi, Technical Member observed that “It is an admitted fact that the goods were correctly described in the relevant documents except for the classification being inadvertently mentioned as 9031 instead of 9016. It is also a fact that till 2007, the rate of duty under both the Headings was same. The documents including the invoices from the foreign supplier which were placed before the Customs Authorities also contained correct description namely precision ‘balances of sensitivity of 5 cg declared as parts of weighing equipment’. It is also on record that without contesting the classification, the appellant had immediately paid the entire differential duty along with interest much prior to the issuance of the show cause notice.”
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