The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) Bangalore, in the case of M.S. Clothing Company, has set aside the penalty imposed under Section 111(m) of the Customs Act, 1962, concerning an alleged misdeclaration.
The Tribunal, comprising R. Bhagya Devi, Member (Technical), ruled that while the appellant, M.S. Clothing Company, was liable to pay the Special Additional Duty (SAD) at 4%, there was no evidence of wilful misstatement or suppression of facts to warrant invoking the extended period of limitation.
The case arose when the appellant had imported garment accessories and filed Ex-bond Bills of Entry, claiming exemptions under certain notifications. Later, the authorities noticed that the goods were no longer eligible for exemption after an amendment in April 2011.
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The authorities, invoking the extended period of limitation, claimed that the appellant had made a misdeclaration.
However, the Tribunal observed that the Bills of Entry clearly mentioned the description of the goods, the relevant exemption notifications, and were duly assessed by customs officers.
The Tribunal held that the claim of exemption was made bona fide, and there was no deliberate intent to miss declare the goods. Therefore, the invocation of the extended limitation period and the penalty under Section 111(m) for misdeclaration were unjustified.
In its ruling, the Tribunal followed the precedent set in Sewing Systems Pvt. Ltd. vs. CC, Bangalore and upheld the demand of SAD only for the normal period, along with interest.
It was also observed that, “the appellant has paid the entire duty amount of Rs.3,95,676/- [ 4% SAD i.e. Rs.2,39,727/- + 18% of interest i.e. Rs.1,55,949/-) for the normal period from February 2012 to October 2012.”
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It was concluded that the appellant had not wilfully misrepresented or suppressed any facts, and the confiscation of goods and penalties under Sections 111(m) and 114A of the Customs Act were unwarranted.
Consequently, the penalty and confiscation were deleted, and the appeal was partially allowed.
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