The commissioner of customs imposed a redemption fine of ₹ 40,00,000/- instead of confiscation of imported goods under Section 125(1) of Customs Act 1962 and a Penalty of ₹ 25,20,152/- imposed under Section 114 A of Customs Act 1962. Totally a fine of 65 Lakh was imposed for short payment of Customs Duty.
Section 125 of the Customs Act, 1962 allows the adjudicating authority to provide an option to the owner of confiscated goods or the person from whom the goods were seized to redeem the goods by paying a fine in lieu of confiscation. This fine is referred to as the “redemption fine.”
As per section 114A of the Customs Act, 1962 , the authority can impose penalties for cases where duty evasion occurs due to fraud, collusion, willful misstatement, or suppression of facts. Stringent penalties were imposed in cases where the evasion of duty is deemed intentional.
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The penalty is imposed alongside the recovery of the duty amount under Section 28(4) of the Customs Act.
The Penalty was imposed by customs authorities for misclassifying imported products under incorrect Harmonized System of Nomenclature ( HSN ) codes. The misclassification led to a short payment of customs duties.
The products were reclassified from HSN 1302 (extracts) to HSN 2106 (food supplements), which carries higher customs duties. This re classification finally resulted in the duty evasion claim.
As per the report by Legal.economic times.india, the Company said that there is no material impact on the Company’s financial, operational or other activities. The company will look at the legal options to challenge the penalties. However, the company has faced legal challenges and penalties in the past also.
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