2025 (7) TMI 1088 - AT - Customs

Entitlement for the alternate benefit of N/N.1/2011-CE dated 01.03.2011 - loading the excess freight amount - wrongful availment of benefit of 4% SAD under N/N. 21/2012 dated 17.03.2012 since the imported goods were not exempted from CVD - demand of differential duty - levy of penalty - HELD THAT - The appellant claimed an alternate benefit of notification seeking amendment to the Bill of Entry by invoking Section 149 read with Section 154 of the Customs Act 1962. In the order of the adjudicating authority the said request was considered to be not relevant being an afterthought is not sustainable. We do not find merit in the observation of the adjudicating authority which upheld by the Ld. Commissioner(Appeals) the same without responding to the request for amendment to the Bill of Entry under Section 149 of Customs Act 1962 and considering the admissibility of alternate Notification No.01/2012. In the facts and circumstances the demands of Rs.19, 86, 628/- and Rs.17, 46, 877/- cannot be sustained and the matter needs to be remanded to the adjudicating authority to recalculate the demand only after disposing the applications seeking amendment to the Bill of Entry under Section 149 read with Section 154 of the Customs Act 1962; thereafter decide the duty liability accordingly. The appellant has paid an amount of AED 95000 valued to Rs.13, 87, 000/- towards freight but declared to the Department only Rs.8, 34, 270/-. The differential amount has been claimed by the appellant as expenses towards the crew members who towed the boats from Dubai to Mangalore. However they did not submit any evidence in support of their claim before the lower authorities nor before this Tribunal. In absence of any such evidence there are no infirmity in ascertaining the correct amount of freight as Rs.13, 87, 000/- which is equivocally admitted by Shri Jagadish Boloor and Shri Taranath Vasu Kotian in their respective statements. Therefore the learned Commissioner(Appeals) has rightly upheld the demand of Rs.53, 128/- with interest and penalty under Section 114A of the Customs Act 1962 - The demand of Rs.53, 128/- and penalty on the company upheld. There are no infirmity in imposing penalty u/s 114AA of the Customs Act 1962 on them; however the quantum of penalty imposed on them seems to be too harsh in the facts of the present case. Consequently the penalty imposed on each of them is reduced to Rs.5, 000/-. Appeal filed by the appellant company is remanded to the adjudicating authority to decide the issue afresh in view of observation that the appellant is eligible for the benefit of alternate N/N. 01/2011-CE dated 01.03.2011 - Demand of Rs.53, 128/- is confirmed with penalty - Appeal disposed off by way of remand.

Summary

ISSUES:

Whether the appellant is entitled to the alternate benefit of Notification No.01/2011-CE dated 01.03.2011 for exemption from Additional Customs Duty (CVD).Whether loading the excess freight amount and demanding differential duty of Rs.53,128/- is justified.Whether the imposition of penalty on the appellants under Sections 114A and 114AA of the Customs Act, 1962 is justified.

RULINGS / HOLDINGS:

On entitlement to alternate Notification No.01/2011-CE: The Court held that the adjudicating authority's rejection of the appellant's request for reassessment under Section 149 read with Section 154 of the Customs Act was not sustainable and that the appellant is entitled to claim the benefit of the alternate notification, as the notification does not restrict benefit to domestic manufacturing units only.On loading excess freight and differential duty demand: The Court upheld the demand of Rs.53,128/- differential duty on the ground that the appellant declared a lower freight amount than the actual payment (AED 95,000 valued at Rs.13,87,000/-), and in absence of evidence supporting the appellant's claim that the balance related to crew expenses, the correct freight amount must be considered for customs valuation.On penalty imposition: The Court confirmed the penalty under Section 114A on the appellant company for suppression of correct freight amount and upheld the penalty under Section 114AA on the individuals involved but reduced the quantum of penalty on the individuals from Rs.1,00,000/- each to Rs.5,000/- each as the original penalty was "too harsh in the facts of the present case."

RATIONALE:

The Court applied the provisions of Section 149 and Section 154 of the Customs Act, 1962 relating to amendment and reassessment of Bills of Entry, emphasizing that the appellant's application for reassessment could not be ignored as an afterthought.The Court relied on the Supreme Court's interpretation in SRF Ltd. v. Commissioner of Customs and related cases, which clarified that the condition in Notification No.01/2011-CE excluding benefit where CENVAT credit is taken applies irrespective of the status of the person and that the benefit is not confined to domestic manufacturing units alone.The Court rejected the Revenue's reliance on a High Court decision (CCE(Exports) v. Prashray Overseas) as distinguishable and not applicable to the facts of the present case.Regarding customs valuation, the Court referenced Rule 10(2) of the Customs Valuation Rules, 2007, holding that expenses incurred on crew towing services cannot be included in the cost of transportation for valuation purposes without supporting evidence.The Court upheld the invocation of the extended period of limitation and penalty provisions due to suppression of correct freight value, consistent with the Customs Act's anti-evasion provisions under Sections 114A and 114AA.