Penalty u/s. 114A imposable only for person who is liable to pay Duty or Interest under section 28: CESTAT [Read Order]

Penalty - pay Duty - Interest - CESTAT - taxscan

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that the penalty under section 114A of the Income Tax Act,  1961 is imposable only for the person who is liable to pay duty or interest under section 28 of the Income Tax Act,1961.

Vinesh Naresh Chheda, the appellant questioned whether a penalty under section 114A, Customs Act, 1962 can be imposed on the appellant, who is not the importer.

A Bill of entry has been filed by the importer & the IEC holder-M/s. Sun Impex for import of goods such as ceiling lamps, chandeliers, wall lamps, hanging lamps, pole lights, drawer slider telescopic, decorative show pieces, hair accessories, cutting plotter, glass door accessories, glass fittings, spectacle frames, watch accessories, garment accessories through CHA M/s. The India Mercantile Agency.

The importer had declared the total CIF value as Rs.7,38,636/- (USD 14042.57) for the declared goods and the customs duty amounting to Rs.2,00,997/- was assessed by them as payable. The department got the information that the importer had imported consignments containing watches and that they would be attempting clearance of the same by way of misdeclaration.

After investigation, the declared value of the consignment as declared by the importer was rejected and the market survey was carried out in the market in the presence of the importer and the claimant of the goods.  The total CIF value of the goods ascertained on the market survey was worked out to Rs.60.99 lakhs (approx.) on which the customs duty was estimated to be Rs.16,37,738/-.

Since the consignment was seized u/s. 110 of the Income Tax Act,1961, the same was released provisionally on the request of the importer and the importer paid the customs duty of Rs.16,42,871/-, which was calculated by loading the CIF value, vide challan dated 31.3.2012.

It was submitted by the counsel of the appellant that the importer is M/s. Sun Impex and the appellant has been penalized only based on speculation withoutthere being any evidence.

It was viewed that no written agreement between the importer and the appellant herein has been placed on record as there was no such agreement as admitted by the importer i.e. Mr Ganesh Shankar Nirulkar, proprietor of  M/s. Sun Impex.

A Coram comprising Mr Ajay Sharma, Member (Judicial) observed thatthe appellant is not the importer but is alleged to be the claimant of the goods and the penalty under Section 114A is liable to be imposed on the person liable to pay duty or interest as determined under section 28 of the Income Tax Act, 1961.

The Tribunal held that the imposition of penalty on the appellant under Section 114A of the Income Tax Act is without the authority of law and allowed the appeal of the appellant.

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Vinesh Naresh Chheda vs Commissioner of Customs

Counsel for Appellant:   Shri D.H. Nadkarni

Counsel for Respondent:   Shri S.B. Hatangadi


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