2025-VIL-781-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Section 114A & 114AA, Customs Duty, Undervaluation, Misclassification – Confiscation on the grounds of undervaluation, misclassification and misdeclaration of the imported goods - Whether the Adjudicating Authority was justified in imposing a penalty under Section 114A that was less than the duty sought to be evaded - HELD - Section 114A of the Customs Act, 1962 mandates the imposition of a penalty equal to the duty sought to be evaded, in cases of short levy due to collusion, wilful misstatement or suppression of facts. The Tribunal relied on the Supreme Court judgment in Dharmendra Textile Processors v. UOI, which held that the Adjudicating Authority has no discretion to reduce the quantum of penalty under the analogous Section 11AC of the Central Excise Act - The Adjudicating Authority erred in not imposing the mandatory penalty equal to the duty sought to be evaded under Section 114A - The appeal filed by the Department is allowed by way of remand, directing the Adjudicating Authority to re-examine the issue of penalties to be imposed in accordance with the law - Whether the Adjudicating Authority was justified in imposing a combined penalty under Sections 112(a)(v), 114A and 114AA - HELD - The fifth proviso to Section 114A clearly bars the levy of penalty under Sections 112 or 114, if a penalty is imposed under Section 114A. Therefore, the imposition of a combined penalty by the Adjudicating Authority reflected a non-application of mind. The Tribunal remanded the matter back to the Adjudicating Authority to re-examine the applicability and quantum of penalties to be imposed under the relevant provisions, duly considering the binding judicial precedents and principles of natural justice.
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