The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) reduces redemption fines when an assessee wrongly claimed benefit under MEIS without being aware of the foreign origin of goods.
The appellant Cipra Enterprise challenged the order of confiscation of the goods and penalty imposed under Section 114(iii) and redemption fine of Rs. 4 lakhs. The Appellant filed Shipping Bill No. 6044624 dated 22.10.2020 for the export of ‘Blood Glucose Test Strips’ and ‘Freestyle Sensor’ under the MEIS scheme.
On examination of the goods by the officers of ACC Export Shed the goods, the Blood Glucose Test Strips were found to be made in Japan and the Freestyle Sensor was made in the UK. It appeared that the Appellant had mis-declared the ‘Country of Origin’ in the export document to claim the export incentives under MEIS. The classification of Blood Glucose Test Strips was mis-declared as CTH 30069100 instead of the correct CTH 38220090.
The goods became liable for confiscation under Section 113(i) of the Act ibid and the packing materials under Section 118(b) of the Act. Further Appellant became liable for penal action under Section 114(iii) & 114AA of the Act Customs Act, 1962.
The Appellant submitted that they are ready to pay the fine and penalty so that the shipment can be exported to the buyer. They further requested to amend the shipping bill and permission for export, without the benefit of MEIS.
The Commissioner (Appeals) observed that it is not in dispute that the goods are not of Indian origin and hence, the appellant was not entitled to claim the benefit of MEIS. They set aside the penalty under Section 114AA of the Act but confirmed the penalty under Section 114(iii) of the Customs Act as well as the redemption fine of Rs. 4 lakhs.
The Appellant contended that the redemption fine and penalty are disproportionate and on the higher side and the same may be substantially reduced for the end of justice.
It was evident that the appellant made a wrong claim of export benefit under MEIS, being misadvised by the CHA. A Coram comprising of Mr Anil Choudhary, Member (Judicial) observed that it was the responsibility of the appellant to understand the eligibility and the conditions before claiming the export benefits.
Further, the Tribunal viewed that the goods were not prohibited goods, and while allowing the appeal modified the redemption fine by reducing it from Rs. 4 lakhs to Rs. 1 lakh. The penalty under Section 114(iii) of the Customs Act, 1962 was reduced from Rs. 50,000/- to Rs. 25,000/-.
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