Whether penalty is to be imposed when the appellant has accepted the classification and paid the entire duty along with penalty much before the issuance of the show cause notice?

2024 (1) TMI 592 - CESTAT BANGALORE

The importer (appellant) filed an appeal concerning the classification of imported balances of sensitivity. The goods were initially classified under Customs Tariff Heading (CTH) 9031, but later found to be correctly classifiable under CTH 9016. The appellant admitted to previous misclassifications and paid the differential duty with interest. However, they faced a penalty under Section 114A of the Customs Act 1962 for alleged suppression of facts.

Appellant's Arguments

1. Correct Product Description: They asserted that the product description was accurate, and any wrong classification was due to the Customs House Agent's error.
2. No Intent to Evade Duty: The appellant argued they had no intent to evade duty, as evidenced by their unblemished record and prompt duty payment upon realization of the error.
3. Eligibility for Waiver of Penalty: They claimed eligibility for waiver of penalty under Section 28(2B) as the duty was paid before the issuance of the show cause notice.

Court's Observations and Decision

1. Classification Error Acknowledgment: The court noted the appellant's acceptance of the correct classification and their prompt payment of the differential duty and interest.
2. No Suppression of Facts: The court found no suppression of facts, as the goods were correctly described, and the misclassification was not deliberate.
3. Penalty Set Aside: Given the circumstances, the court ruled that the penalty imposed under Section 114A was not justified, and it was set aside.

Conclusion

The appeal was allowed, and the penalty imposed on M/s. Minebea Intec India Private Limited was set aside, recognizing the lack of intent to evade duty and the prompt rectification of the classification error.

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2024 (1) TMI 592 - CESTAT BANGALORE