No Retrospective Effect to S.114AA of Customs Act: CESTAT Sets Aside Penalty [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT)  set aside the penalty imposed under section 114AA of the Customs Act,1962 on the ground that the provision had no retrospective effect, as it was introduced after the Bill of Entry was filed in 2003.

Indusind Media and Communications Limited, appellant-assessee, filed a Bill of Entry on 26.6.2003. After investigation, a Show Cause Notice was issued on 27.6.2014 proposing recovery of differential duty, confiscation of goods, redemption fine under section 125, and penalties under sections 112(a) and 114AA of the Customs Act.

The Commissioner confirmed these demands on 27.6.2014. The assessee appealed, and the tribunal partly allowed the appeal on 9.11.2017, sending the case back to recalculate the duty and penalties. The Supreme Court upheld this decision on 27.9.2019.

The Commissioner then issued a new order on 13.11.2019. The differential duty was reduced from Rs. 54,19,475 to Rs. 33,44,077. The redemption fine stayed at Rs. 10,00,000. The penalty under section 112(a) was reduced from Rs. 15,00,000 to Rs. 10,00,000, and the penalty under section 114AA remained Rs. 15,00,000.

Received a GST Notice? Don’t Panic! - Click Here

The assessee said the redemption fine was too high compared to the reduced duty and should be lowered. They also said the redemption fine under section 125 should have been reduced with the duty. The penalty under section 112(a) was still high and could be lowered. They argued that the penalty under section 114AA should not apply because it started after the Bill of Entry date. Though this was not raised earlier, they asked for it to be considered.

The authorized representative supported the order and opposed any changes.

Read More:Quotations from Unrelated Suppliers Not a Valid Basis for Customs Revaluation: CESTAT

The tribunal reviewed the arguments and records. It kept the redemption fine of Rs. 10,00,000 unchanged because the Supreme Court had upheld the earlier order. It reduced the penalty under section 112(a) from Rs. 10,00,000 to Rs. 5,00,000, considering the lower duty amount.

The appellate tribunal also said the penalty under section 114AA could not apply because this rule started after the Bill of Entry date in 2003. Since the penalty was based on a law not in effect then, it was cancelled.

The two member bench comprising Justice Dilip Gupta(President) and P.V.Subba Rao(Technical Member) partly allowed the appeal by setting aside the penalty under section 114AA, lowering the penalty under section 112(a), and confirming the rest of the order.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates