The Bangalore bench of the Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) held that mere omission to give correct information is not suppression of facts unless it was deliberate to evade customs duty.
M/s. Minebea Intec India Private Limited, the appellant filed a Bill of Entry dated 6.10.2009 for the import of balances of a sensitivity of 5 cg or better classifying the same under Customs Tariff Heading ( CTH ) 9031. However, after investigations, it was found to be rightly classifiable under CTH 9016. The importer in their letter dated 19.11.2009 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. However, the Respondent alleging suppression of facts to evade payment of duty, imposed a 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. Before the Commissioner ( Appeals ) they requested for consideration of the benefit under Section 28(2B) for waiver of penalty. It was submitted that since a complete description of the goods was provided, suppression intended to evade payment of duty cannot be alleged and accordingly, a penalty needs to be set aside which was rejected by the Commissioner ( Appeals ).
It was submitted that the Bills of Entry through the Chapter, Heading was wrongly mentioned 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.
He also submitted that since their office was being shifted, they had entrusted the clearance of the goods to the Customs House Agent ( CHA ) who had declared wrongly the classification but the description was correctly mentioned as per the documents on record. It was further submitted they are a regular importer of these goods and maintain an unblemished record with the Customs Department.
The only dispute is whether the penalty is to be imposed when the appellant has accepted the classification and paid the entire duty along with the penalty much before the issuance of the show cause notice. 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.
The documents including the invoices from the foreign supplier which were placed before the Customs Authorities also contained correct descriptions namely precision ‘balances of a 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 before the issuance of the show cause notice.
A two-member bench comprising of Mr P A Augustian, Member ( Judicial ) and Mrs R Bhagya Devi, Member ( Technical ) observed that the appellant had paid the differential duty in 2009 and the notice was issued only in 2011 to appropriate the amounts and imposed penalty.
The High Court of Karnataka in the case of Commissioner of Customs, Bangalore vs. Powerica Ltd, it was observed that if duty and penalty are paid even before the issue of show cause notice and the said fact is informed to the proper officer, he shall not initiate any proceedings to recover the duty and interest, much less for the imposition of penalty. Therefore, the order imposing a penalty is illegal.
The CESTAT set aside the penalty and allowed the appeal.
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