Penalty and Redemption Fine Cannot be Imposed When Bill of Entry has been Finally assessed at Declared Value: CESTAT [Read Order]

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that penalty and redemption fines cannot be imposed when the bill of entry has been finally assessed at the declared value.

Kumar Impex, the appellant has imported ‘PU coated fabric’ (thickness 0.50 mm +/- 10%) vide Bill of Entry dated 14.10.2016 and requested for the first check. The departmentfound in the description of the imported goods and the thickness of the goods imported and an inquiry was initiated.

During the pendency, the appellant requested for provisional release of the goods and the same was allowed against PD Bond and 100% bank guarantee of differential duty, which was granted by the department and the goods were released.

The declared value was rejected and a process was initiated to re-determine the value by the Customs Valuation Rules,2007 accordingly, a Show cause notice dated 25.1.2018 was issued proposing to reject the declared assessable value/transactional value and to re-determine the same and to finally assess the Bill of Entry under the same heading in which it was assessed provisionally and also to confiscate/impose redemption fine along with penalty under different provisions of Customs Act, 1962.

The Adjudicating Authority confirmed the rejection of the declared value and redetermination of the value along with interest, penalty & redemption fine and also ordered the appropriation of the amount deposited by the appellant during the proceedings based onpre-determined value.

On Appeal, the Commissioner (Appeals) set aside the rejection of transaction value and re-determination of value for the goods imported vide Bill of Entry dated 14.10.2016 but upheld the appropriation of Rs.11,03.907/- paid as a duty by the appellant at the time of assessment against the re-determined customs duty and also upheld the redemption fine and penalties under various provisions of Customs Act, 1962. 

The issue is whether redemption fine, and penalties can be imposed and the amount paid by the appellant as duty at the time of assessment against the re-determined value can be appropriated when the rejection of declared value & re-determine of value has been set aside in appeal.

A single member bench of Mr Ajay Sharma, Member (Judicial) observed that “during the pendency of appeal herein, the Bill of Entry has been finalized as per declared value that when the Bill of Entry has been finally assessed at the declared value then the redemption fine and penalties cannot be imposed. Since this development occurred after the passing of the impugned order”

The CESTAT bench remanded the matter back to the Commissioner to be decided afresh on merits after taking into consideration the development after the passing of the impugned order.  While allowing the appeal, the bench set aside the impugned order.

To Read the full text of the Order CLICK HERE

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