Custom, Excise & Service Tax Tribunal
Cc Sea Ch - Ii vs Sri Krishna Sounds &Amp; Lightings on 3 July, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/CO/40454/2018 and C/42180/2016
(Arising out of Order-in-Appeal C. Cus. II No.757/2016 dated
5.8.2016 passed by the Commissioner of Customs (Appeals -
II), Chennai)
Commissioner of Customs, Sea, Chennai - II Appellant
Vs.
M/s. Sri Krishna Sounds and Lightings Respondent
Appearance Shri R. Subramaniam, AC (AR) for the Appellant Shri M.N. Bharathi, Advocate for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Date of Hearing / Decision: 03.07.2018 Final Order No. 41937 / 2018 Brief facts are that the respondents filed Bill of Entry dated 16.9.2014 for clearance of goods declared as "Furniture, Electronics goods etc. After giving first check to verify the declaration made, it was found that the items declared as 'Electronic Power Pot' classified under CTH 94059900 as parts of 'Lamps and Light Fittings' and were actually found to be 'Stage Silver Fountain' which are fire crackers correctly classifiable under CTH 36041000. Further, some items like amplifiers and speakers were found to be old and not declared as such by the 2 respondents. For such reasons, after investigation, the SIIB issued show cause notice dated 28.10.2015 to the respondent proposing to reclassify the goods, demanding duty, for confiscation and for imposing penalties. After due process of law, the original authority rejected the value declared in respect of electronic flower plot and redetermined the same, confiscated the goods with option to redemption and further confiscated the electric bike etc. and imposed penalties under Section 112(a) as well as under Section 114AA of the Customs Act, 1962. In appeal, the Commissioner (Appeals) set aside the penalty imposed under Section 114AA. Aggrieved, the department is now before the Tribunal against the order of Commissioner (Appeals) who has set aside the penalty imposed under Section 114AA. The respondent has filed cross-objection to set aside the entire demand confirmed after rejecting the declared value etc.
2. On behalf of Revenue, the ld. AR Shri R. Subramaniam reiterated the grounds of appeal. He submitted that the items which were declared as fire pots were actually fire crackers and were classifiable under 36041000. The violation of the provisions of Act would not have to light but for the examination conducted by the department. The respondent had previously imported goods under similar declarations and therefore is guilty of repeated violations. The Commissioner (Appeals) has set aside the penalty imposed under Section 114AA observing that a penalty has been already imposed under Section 112(a). 3 Even if a penalty is imposed under Section 112(a), if the ingredients are present, the penalty under Section 114AA ought to have been imposed. The adjudicating authority having imposed the penalty both under Section 112(a) and 114AA, the Commissioner (Appeals) ought not to have set aside the penalty imposed under Section 114AA.
3. The ld. counsel Shri M.N. Bharathi supported the submissions made in the cross-objection filed by them. He adverted to Section 114AA of the Customs Act and also the discussions made in the impugned order with respect to the report of the Standing Committee before introduction of the said provision in the Customs Act. It is argued by him that when Section 112(a) relates to violations in regard to situation where goods are liable for confiscation under Section 111, the provision under section 114AA deals with situations of intentionally making or using any declaration, statement or document which is false or incorrect in the transaction of any business for the purpose of Customs Act. The said Section is intended to penalize situation where there are paper transaction without any actual import or export of goods. In the present case, the department has no case that the transaction was a paper transaction and that no goods were imported by the respondent and therefore the penalty imposed under Section 114AA is not attracted. He submitted that the respondent is not pressing the cross-objection filed by them and is confining the 4 counter submission with regard to the appeal filed by the department.
4. Heard both sides.
5. The cross-objection filed by the respondent is not pressed and therefore is dismissed.
6. The ld. AR has submitted that the Commissioner (Appeals) has set aside the penalty under section 114AA for the reason that penalty has been imposed by the adjudicating authority under section 112(a) and therefore there is no necessity of further penalty under section 114AA. I find that this submission is incorrect for the reason that in the impugned order in para 7 and 8, the Commissioner (Appeals) has discussed in detail the provision with regard to Section 114AA. It is seen stated that as per the Taxation Laws (Amendment) Bill, 2005, introduced in Lok Sabha on 12.5.2005, the Standing Committee has examined the necessity for introducing a new Section 114AA. The said Section was proposed to be introduced consequent to the detection of several cases of fraudulent exports where the exports were shown only on paper and no goods crossed the Indian border. The said Section envisages enhanced penalty of five times of the value of the goods. The Commissioner (Appeals) has analyzed the object and the purpose of this Section and has held that in view of the rationale behind the introduction of Section 114AA of the Customs Act and the fact that penalty has already been imposed under Section 112(a), 5 the appellate authority has found that the penalty under Section 114AA is excessive and requires to be set aside. Thus, the penalty under Section 114AA is not set aside merely for the reason hat penalty under Section 112(a) is imposed. After considering the ingredients of Section 114AA and the rationale behind the introduction of Section 114AA, the Commissioner (Appeals) has set aside the penalty under Section 114AA.
7. On appreciating the evidence as well as the facts presented and after hearing the submissions made by both sides, I am of the view that the Commissioner (Appeals) has rightly set aside the penalty under Section 114AA since the present case involves importation of goods and is not a situation of paper transaction. I do not find any merit in the appeal filed by the department and the same is dismissed. The cross- objection filed by respondent also stands dismissed.
(Operative portion of the order was pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) Rex