TMI Blog2017 (2) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 114A which stipulates that "Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114." Appeal allowed - decided in favor of appellant-Revenue. - CUSAA 28/2016, C.M. APPL.39487-39489/2016 - - - Dated:- 14-2-2017 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Appellant Through: Sh. Sanjeev Narula, Sr. Standing Counsel and Sh. Abhishek Ghai, Advocate. Respondent Through: Sh. M.P. Devnath with Sh. Abhishek Anand and Sh. Yogendra Aldak, Advocates. MR. JUSTICE S. RAVINDRA BHAT 1. The question of law framed in this case is whether the Customs Excise and Service Tax Appellate Tribunal (CESTAT) erred in holding that no penalty under Section 112 (a) of the Customs Act, 1962 could have been levied in the circumstances of the case. 2. The appellant filed a Bill of Entry dated 28.10.2002 through its CHA, Elecon Cargo Agency for the goods declared as IS 1000 Fibre-Optic Endoscope Surgical System classifying it under Customs Tariff Heading 9018.90 and claimed the benefit of concessional rate of duty under Serial No. 363 (A) List 37 Item No. 82 of Notification No. 21/2002 Cus, dated 01.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the judgment of this Court in the case of CC (I G) Vs .Care Foundation [2014 (302) TLT 181 (Delhi)]. The assessee nevertheless argued that no interest under section 28AB was recoverable because the demand was not raised/confirmed under Section 28, urging that even if the Order-inOriginal were to be construed as made during finalization of the provisional assessment under Section 18, no interest could be demanded as the provision for interest liability was introduced on 13.07.2006 by insertion of Section 18 (3) while in the present case, the Bill of Entry was provisionally assessed on 28.10.2002 and that the interest cannot be demanded upon finalization even if such finalization was done after 13.07.2006. It cited several judgments to that effect including the case of C .C.(Prev.) Vs. Goyal Traders [2014 (302) 529 (Gujarat)] and Sterlite Industries India Ltd. Vs. CC - 2008 (223) ELT 633 (Tri.-Chennai). 4. Before the CESTAT, in the case of the indenting agent and the importer (the assessee) reliance was placed on the judgment in Care Foundation (supra) to contend that imposition of penalty was unwarranted. After hearing rival submissions, the CESTAT set aside the demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty from ₹ 25 to ₹ 5 lakhs. Following the same ratio, the appellant pleaded that the penalty set aside by the Tribunal should not be interfered with. It was also argued that the differential duty had been paid, of a substantial amount. It was argued that since in respect of the same product, the issue of misdeclaration and the consequent penalty imposed had been decided in the other assessee's favour in the other cases, this court should not take a different view in the present case. Counsel also relied on Amrit Foods v Commissioner of Central Excise 2005 (190) ELT 433 (SC). 7. At the outset, it is essential to notice the CESTAT's reasoning, which granted relief to the importer/assessee. The Tribunal held that: We have considered the contentions of all sides and perused the records. Para 47 of the show cause notice reads as under:- 47. Hence, M/s. Escorts Heart Institute Research Centre Limited, Okhla Road, New Delhi - 110025, Shri Bhuvander Kaul, M/s. J. Mitra Bros, 20, Double Storey Market, New Rajinder Nagar, New Delhi M/s. Elecon Cargo Agency, N264-270, Raghubir Nagar, New Delhi are hereby called upon to show cause to the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by inserting Section 18 (3) even if the finalisation of assessment took place after 13.07.2006. In the case of the Sterlite Industries Vs. C.C., [2008 (223) ELT 633 (Tri -Chennai)] it was held that no interest is payable on the differential duty determined on finalisation of provisional assessment made prior to 13.7.2006 even if such finalisation took place after 13.07.2006. Similar view is held in the case of C.C.(Prev.) Vs. Goyal Traders - 2014 (302) ELT 529 (Gujarat). 8. It is evident from the foregoing analysis that the Show Cause Notice did not raise the demand in terms of Section 28 ibid. The wording of Section 114A ibid makes it expressly clear that penalty under that Section is attracted when liability to pay duty or interest is determined under Section 28 ibid. Indeed, in the case CC (I G) Vs. Care Foundation (supra), involving similar facts and circumstances, Delhi High Court held as under:- 6. In the opinion of this Court, no exception can be taken to the finding that since there was no demand under Section 28(8) of the Customs Act for duty, no penalty could have been imposed under that provision and consequently the penalty under Section 114A was not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hereafter 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, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or 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 higher. ************************** *********** SECTION 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 ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person. 11. At the outset, this court is of the opinion that the question of law was inaccurately framed, because in the present case the invocation of the extended period of limitation has remained unchallenged; therefore, the Revenue's competence to demand differential duty has to follow, by virtue of Section 28. Given that penalty under Section 112 (a) cannot be imposed if penalty under Section 114A is invoked, the correct question of law therefore is whether the CESTAT erred in deleting the penalty under Section 114A in the facts and circumstances of this case. 12. On the facts, there is no dispute that the goods were mis-declared. This aspect was clearly alleged by the show cause, which inter alia, reads as follows: 41. From the evidence gathered from tile records, brochures manuals obtained during investigation, information gathered from various publications articles appearing In the print media, the information obtained from various websites a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the robotic surgical system. It is noticed that in various brochures, the manufacturer had initially described the equipment as 'da Vinci Surgical System' and also in the initial correspondence between the Importer, supplier and the distributor. However, subsequently, the importer, M/s Escorts Heart Institute Research Centre Limited changed the description of the system by adding the word endoscopic in their correspondence with the suppliers. Moreover, the Importer had asked the distributor, M/s J. Mitra Bros to obtain letters from the manufacturer, M/s Intuitive Surgical Inc, USA stating that the equipment was Fibre Optic Endoscopic System with the sole purpose of getting the equipment cleared from Customs at the concessional rate of customs duty @ 5% under Customs Notification no. 21/2002 - S. No. 363(A) as against the normal applicable customs duties @ 25% + 16% + 4% (effective 50.8%). Besides, the documents recovered by the Hyderabad Customs show that the original pamphlet of the manufacturer was manipulated by the distributor, M/s J. Mitra Bros by Interpolating the words Endoscopic Coronary Artery Bypass System in place of Surgical System . 13. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove that there was a pre-mediated plan to mis-declare the goods in order to incorrectly avail the benefit of exemption under notification no. 21/2002- Cus dated 1.3.02 thereby rendering the imported goods liable to confiscation and the importer, M/s Escorts liable for penal action as proposed in the show cause notice. On the same wounds Shri Bhuvander Kaul, Deputy General Manager (Medical Materials) of M/s Escorts, who was inter-alia looking after import of the equipment is also liable for penal action under Section 112 (a) of the Customs Act, 1962 as he is found to be having knowledge of and also part of the entire plan to mis-declare the descriptions of the imported item to wrongly avail the exemption under the aforesaid notification. In these given circumstances- and having regard to the clear terms of the Show Cause Notice, this court is of the opinion that the CESTAT could not have set aside the penalty, which is mandatory. What the Revenue could not have done (and in fairness, did not) was to impose penalty in addition, under Section 112 (a); this is because of fifth proviso to Section 114A which stipulates that Provided also that where any penalty has been levied un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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