The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that imposing penalty under section 114A is not permissible in the absence of collusion, wilful misstatement, suppression of facts or even any duty liability.
M/s Bagadiya Brothers Pvt Ltd and Shri Anand Kumar Agrawal, the appellants challenged the Order-in-Original dated 03.01.2012 passed by the Commissioner of Customs, Visakhapatnam. The Appellants exported iron ore fines which are subject to export duty at Rs.300 per MT. If the Fe content of the iron ore fines was below 62% they are exempted from the export duty of more than Rs.50 per MT by Notification No. 62/2007-Cus dated 03.05.2007.
The exporter filed a shipping bill dated 31.05.2008 claiming the Fe content to be less than 62%, enclosed with it was a test report from a private testing laboratory dated 30.05.2008 which indicated the Fe content as 61.03%.
The shipping bill was assessed provisionally by the assessing officer subject to the execution of a test bond, where the conditions were that the exporter would abide by the test report of the Central Revenue Control Laboratories (CRCL) and if the Fe content is above 62% it would pay the differential export duty. On receipt of the test report, the test bond executed by the exporter was cancelled by the assessing officer.
Based on the intelligence collected and investigation conducted by the DRI, the Commissioner of Customs, Visakhapatnam proposing to re-assess the export duty and recover the differential duty at Rs.250 per MT under the proviso to Section 28(1). It also held that the exported goods were liable for confiscation under Section 113(i) of the Customs Act and impose penalties on the exporter under Section 114(ii)/ 114A of the Customs Act.
A Coram of Mr Anil Choudhary (judicial) and Mr P Venkata Subba Rao, member (technical) observed that section 114A provides for imposing a penalty for short levy or non-levy of duty because of collusion or any wilful misstatement or suppression of facts by the person who is liable to pay the duty or interest.
The Tribunal didn’t find any collusion or wilful misstatement or suppression of facts or even any duty liability because the entire demand has been made only by applying the test reports which are on a dry MT basis instead of test reports on a wet MT basis in violation of the law and also contrary to the directions of the Board in Circular No. 04/2012 dt.17.02.2012.
While allowing the appeal, the Tribunal set aside the impugned order. Shri Hari Radhakrishna, Advocate appeared for the Appellants and Shri P. Amaresh appeared for the Revenue.
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