2025-VIL-1872-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Section 114A of Customs Act, 1962 – Import of crude palm oil – Demand of duty – Appellant had imported Crude Palm Oil by availing benefit of Exemption Notification No.12/2012-CUS – Appellant had not used imported Crude Palm Oil in manufacture of final products due to fire accident took place in factory – Department issued show cause notice to Appellant by proposing demand of duty on imported Crude Palm Oil – Commissioner confirmed demand of duty along with interest and imposed penalty under Section 114A of the Act – Whether Appellant is liable to pay customs duty on entire quantity of imported Crude Palm Oil – HELD – Appellant had imported Crude Palm Oil for use in manufacture of specified goods and availed benefit of Exemption Notification No.12/2012. Notification No.12/2012 exempted duty subject to condition that Crude Palm Oil is used for manufacture of Refined Oil, Vanaspati, Bakery Shortening etc. Appellant had not used imported Crude Palm Oil in manufacture of final products specified in Notification No.12/2012 in view of fire accident. Appellant had informed department claiming loss of 282.92 M.T of Crude Palm Oil, while on joint physical stock verification, 214.07 M.T. was found to have been lost. Appellant’s case is that shortage was on account of accounting error. There is no sufficient evidence to support contention of Appellant that there was an accounting error and how it had occurred. Since condition to avail benefit of Exemption Notification No.12/2012-CUS was not fulfilled, Appellant was liable to pay customs duty on entire quantity of Crude Palm Oil which was either lost in fire accident or was found short. Demand of customs duty as confirmed in impugned order along with interest needs to be upheld – Appeal partly allowed - Imposition of penalty – Sustainability – Whether penalty imposed on Appellant under Section 114A of the Act is sustainable – HELD – Section 114A of the Act provides for imposition of penalty equal to amount of customs duty, if non-payment or short payment of duty is by reason of collusion, willful mis-statement or suppression of facts. In this case, vast majority of disputed quantity was lost in fire accident. There is no evidence that Appellant had caused fire accident or that it gained anything by destroying Crude Palm Oil in fire. Penalty imposed under Section 114A of the Act cannot be sustained and needs to be set aside.
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