By TIOL News Service

CHENNAI, SEPT 15, 2015: THE appellant imported a Nissan GTR carin November 2008 claiming that it was for personal use. After declaring that it was a brand new car, customs duty was paid claiming benefit under S.No.344(2) of Notification No.21/2002-Cus dated 1.3.2002.

The DRI doubted the valuation of this car and consequently a SCN came to be issued on 06.05.2011.

No adjudicating authority usually disputes a case booked by the premier agency and the result is almost always a foregone conclusion.

The proposals made in the SCN were upheld inasmuch as the differential duty of Rs.46,85,350/- was confirmed; interest held payable; confiscation was ordered; equivalent penalty was imposed on the importer u/s 114A and an additional penalty of Rs.5 lakhs u/s 114AA of the Customs Act, 1962. This was in February 2013.

In appeal, the Commissioner(A) re-determined the value of the car as Rs.49,84,613/- and directed the ‘group' (department) to calculate the correct differential duty. He also held that mandatory penalty is imposable u/s 114A but the benefit of reduced penalty @25% is available to the appellant if duty is paid within one month. Nonetheless, the penalty imposed of Rs.5 lakhs u/s 114AA of CA, 1962 was upheld.

Against this order, the importer knocked the doors of the CESTAT.

Suffice to mention that what the appellant actually sought was a waiver of penalty imposed u/s 114AA due to the fact that the duty itself was not assessed and also due to the admitted fact that the vehicle was seized from the custody of the third party.

The Tribunal passed an order on 4.2.2015 directing the appellant to deposit Rs.10 lakhs within four weeks for getting a stay in the matter.

As the pre-deposit ordered was not paid, the appeal was dismissed on the ground of non-compliance on 15.4.2015. The contention of the appellant that since the vehicle was not in his custody and was already seized from the third party, they were entitled to the benefit of Section 129E; that the question of making a deposit of Rs.10 lakhs did not arise, when the quantum of penalty itself was stipulated only as Rs.5 lakhs;that the penalty of Rs.5 lakhs is secured on account of a bank guarantee already furnished to the extent of Rs.8.02 lakhs, was rejected by the Bench on the short ground that the appellant did not raise this point at the time when the conditional order was passed.

Before the Madras High Court, the importer narrated his woes.

The High Court took a careful look at the orders passed by the original authority as well as that passed by the Commissioner(A) and observed –

+ The only amount quantified to be payable by the appellant is a penalty of Rs.5 lakhs. The other things such as duty payable, interest on duty, etc., have not yet been quantified. In such circumstances, the appellant was right in contending that his application was not actually an application for waiver of pre-deposit condition, but for waiver of penalty. The fact remains that the appellant is entitled to the benefit of Section 129E in view of the admitted position that the vehicle was seized from the custody of a third party.

+ Once these things are actually borne out by records, it was not correct on the part of the Tribunal to take a stand that at the time of passing the conditional order, the plea regarding bank guarantee was not raised. Even if the plea regarding the bank guarantee was not raised, this was not a case where a pre-deposit condition, even if it is leviable, cannot be twice the amount of penalty, which was the only item that was assessed even in the order on appeal. Therefore, we are of the considered view that the appellant is entitled to succeed.

The civil miscellaneous appeal was allowed and the order of the Tribunal was set aside.

The CESTAT was directed to take up the appeal for hearing and dispose it in accordance with law.

(See 2015-TIOL-2135-HC-MAD-CUS)