Custom, Excise & Service Tax Tribunal
Tuticorin vs Roshan Overseas on 6 May, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Customs Appeal No. 41727 of 2014
(Arising out of Order-in-Original No. 27/2014 dated 28.03.2014 passed by Commissioner of
Customs, Custom House, Tuticorin - 628 004)
Commissioner of Customs ...Appellant
Tuticorin Commissionerate,
New Harbour Estate,
Custom House,
Tuticorin -628 004.
Versus
M/s. Roshan Overseas ...Respondent
Godown No. 13, Laxman Compound, Rahnal Village, Bhiwandi, Thane District, Maharashtra - 421 302.
APPEARANCE:
For the Appellant : Shri Anoop Singh, Authorised Representative For the Respondent : None CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL) FINAL ORDER No. 40500 / 2025 DATE OF HEARING : 01.04.2025 DATE OF DECISION : 06.05.2025 Per Mr. VASA SESHAGIRI RAO This Customs Appeal No. C/41727/2014 has been filed by the Department for modification of the Order-in-Original No. 27/2014 dated 28.03.2014 passed by the Commissioner of Customs, Tuticorin to the extent of non-imposition of 2 C/41727/2014 equivalent penalty to the duty sought to be evaded in terms of Section 114A of the Customs Act, 1962 and also for non-
imposition of any penalty under Section 114AA of the Customs Act, 1962.
2.1 Brief facts of the appeal are that the Commissioner of Customs, Tuticorin, vide Order-in-Original No.27/2014 dated 28.03.2014 had confiscated the import consignment of 645 Bales (107806 Sq.Mtrs.) of varieties of fabrics covered under the Bill of Entry No. 6507000 dated 10.04.2012 filed by M/s. Roshan Overseas for having been imported by misdeclaration, misclassification and undervaluation contravening the provisions of Section 111(m) of Custom Act, 1962.
2.2 The Ld. Adjudicating Authority had found that most of the imported cargo as mis-declared and mis- classified resulting in undervaluation and it was held therein that declared value was not reflecting the actual transaction value. As such, he confiscated the imported goods which are in different varieties of fabrics with assessable value at Rs.1,66,28,125/- and rejected the transaction value declared by the importer in terms of Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and 3 C/41727/2014 redetermined the value and demanded differential duty of Rs.86,24,294/- and also imposed a penalty of Rs.16,00,000/- under Section 112(a)(v), 114A and 114AA of the Customs Act, 1962 on the importer for mis-declaring the nature of the imported goods and for indulging in undervaluation.
3. The main grounds of the Department are: -
i. That the differential duty on the import consignment has been determined as Rs.86,24,294/- which is the duty sought to be evaded by the importer by misdeclaration, misclassification and undervaluation. ii. That the Adjudicating Authority, while imposing penalty under Section 114A of the Customs Act, 1962, has imposed a penalty of Rs.16,00,000/- on the importer which is less than the duty demanded in this case. The legal text of Section 114A, ibid, stipulates that in cases of short levy by reasons of collusion or any willful mis- statement or suppression of facts, the person who is liable to pay the duty or interest under Section 28, as the case may be, shall be liable to pay a penalty equal to the duty or interest so determined. Plain reading of the legal text as above clearly shows that the 4 C/41727/2014 Adjudicating Authority does not have any discretion as to the quantum of penalty imposed under Section 114A, ibid, which is a mandatory penalty equal to the duty so demanded under the said Act.
iii. That the Adjudicating Authority should not have imposed less penalty under Section 114A of the Customs Act, 1962 which is less than the differential duty determined relying on the judgement passed by the Larger Bench of Hon'ble Supreme Court in the case of Dharmendra Textile Processors Vs. UOI [2008 (231) ELT 3 (SC)] wherein the Hon'ble Apex Court had held that no discretion is available to the Adjudicating Authority on quantum of penalty under Section 11AC of Central Excise Act, 1944. The provisions of Section 114A of the Customs Act, 1962, are pari-materia with the provisions of Section 11AC of the Central Excise Act, 1944.
iv. That the Adjudicating Authority has imposed penalty under Section 112 and 114A. However, the statute provides for mutual exclusivity of penalty under the said Sections, which is clearly reflected in the fifth proviso to Section 114A of the Customs Act, 1962. and, 5 C/41727/2014 v. That the Adjudicating Authority has also not discussed about penalty under Section 114AA of the Customs Act, 1962.
4. The Ld. Authorized Representative Mr. Anoop Singh representing the Revenue has first reiterated the Grounds of Appeal and then argued for imposition of equivalent penalty relying upon the decision rendered by the Jurisdictional High Court in the case of Commissioner of Customs (Exports) Vs. M/s. KRM International Ltd. and Others [2014 (309) ELT 456 (Mad.)] wherein it was held that there was no discretion to reduce the quantum of penalty than what is provided in terms of the statute and that there is a specific mandate that the importer shall be liable to pay a penalty equal to the duty or interest as determined by the authority concerned, when there is a mis-declaration and the Adjudicating Authority is not justified in reducing the penalty imposed under Section 114A of the Act.
5. We have heard the Ld. Authorized Representative for the Department. No one was present for the importer viz., Roshan Overseas. It is noted here that the importer M/s. Roshan Overseas has also filed an appeal i.e, 6 C/41727/2014 C/42231/2014 against the same impugned order dated 28.03.2014 which was dismissed for non-prosecution vide F.O.No. 40413/2025 dated 01.04.2025.
6. We have perused the impugned Order-in-Original No. 27/2014 dated 28.03.2014 and other connected records and also the case laws relied upon.
7. The allegations against the importer include mis- declaration, misclassification and undervaluation of the imported goods. The importer in his written reply has contended that the imported consignment was asked to be examined on the First Check Basis and that they have not opted for self-assessment basis. The basic contention of the Department is that the Adjudicating Authority should not have imposed less penalty than the duty determined to be evaded by misclassification and undervaluation and that the decision in the case of Union of India Vs. Dharamendra Textile Processors [2008 (231) ELT 3 (SC)] mandates imposition of equivalent penalty sought to be evaded.
8. We find that the Adjudicating Authority has imposed a combined penalty of Rs.16,00,000/- under Sections 112(a)(v), 114A and 114AA of the Customs Act, 7 C/41727/2014 1962 for mis-declaring the nature of imported goods, rendering them liable to confiscation. The relevant provisions are extracted below: -
Section 112 of the Customs Act, 1962: -
"112. Penalty for improper importation of goods, etc.
- Any person,-
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees] [Substituted by Act 14 of 2001, Section 107, for certain words (w.e.f. 11.5.2001). ], whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees,] [ Substituted by Act 14 of 2001, Section 107, for certain words (w.e.f. 11.5.2001).] whichever is the greater;
[(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereinafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees] [Inserted by Act 36 of 1973, Section 3 (w.e.f. 1.9.1973). ],[whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and
(iii), to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees],[whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and
(iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], [whichever is the highest.] 8 C/41727/2014 Section 114A of the Customs Act, 1962: -
"114A. [Penalty for short-levy or non-levy of duty in certain cases.
- Where the duty has not been levied or has been short- levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined:] [Provided that where such duty or interest, as the case may be, as determined under sub-section (2) of section 28, and the interest payable thereon under section 28-AB, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined:
Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso:
Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty or interest as reduced of increased, as the case may be, shall be taken into account:
Provided also that in a case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, alongwith the interest payable thereon under section 28-AB, and twenty-five per cent. of the consequential increase in penalty have also been paid within thirty days of the communication of the order by which such increase in the duty or interest takes effect:
Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114.9
C/41727/2014 Explanation.-For the removal of doubts, it is hereby declared that-
(i) xxx
(ii) xxx]"
Section 114AA of the Customs Act, 1962:-
"114AA. [ Penalty for use of false and incorrect material.
- If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.]"
From the perusal of the above statutory provisions, it is clear that they are distinct and meant for imposition of penalty on the basis of facts obtaining in each case. In fact, prima facie it appears that the fifth proviso to Section 114A bars levy of penalty under Section 112 or Section 114, if a penalty were to be imposed under Section 114A. Therefore, the act of the Adjudicating Authority in imposing a combined penalty very clearly reflects a non-application of mind. We therefore remand the matter back to the Adjudicating Authority for the limited purpose of a decision afresh on the applicability and quantum of the penalties that are to be imposed under the aforesaid provisions, duly bearing in mind the relevant binding judicial precedents. Needless to say, the Adjudicating Authority should adhere to the principles of natural justice. 10
C/41727/2014
9. In the result, the appeal is allowed by way of remand on the aforesaid terms.
(Order pronounced in open court on 06.05.2025) Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) MK