The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Suzlon Energy Ltd Versus Commissioner of Customs has quashed the order of confiscation and imposition of penalty against Suzlon Energy as there was no misdeclaration under Customs Act.
The bench of C J Mathew (Technical Member) and Ajay Sharma (Judicial Member) has observed that the exchange rate for US$ is stipulated, under section 14 of Customs Act, 1962, by the Central Board of Indirect Taxes and Customs (CBIC) upto two decimal points for the foreign currency and four decimal points for the Indian currency. Despite this, the customs authorities concerned with the clearance of the goods found it more appropriate to take the computation of the import price in US$ terms to the third decimal which is inconsistent with not only with currency systems of the world but also the practice adopted by the Central Board of Indirect Taxes and Customs (CBIC). No justification has been offered for this anomaly in computation of the transaction value.
The appellant/assessee, M/s Suzlon Energy Ltd manufactures ‘wind operated electric generators’ and for their processing procures huge quantities of imports with substantial implications of revenue. They had, against bill of entry no. 7960388/17.09.2012, imported ‘tacky tapes’ admeasuring 249786.65 meters with declared value of Rs.5,07,275.67 on which basic customs duty of Rs.25,363, additional duty of customs amounting to Rs. 63,916 and other duties totaling to Rs. 1,15,928 was duly discharged.
The discharge of duty liability on invoice value US$ 7493.60 was found to be inappropriate and the proper officer of customs directed that the per unit rate of US$ 0.033 per meter should be applied on the total quantity for levy of differential duty of Rs. 1,15,928 besides subjecting the imported goods to confiscation under section 111 of Customs Act, 1962 with option to redeem on payment of fine of Rs. 50,000 and penalty of Rs. 40,000 imposed under section 112 of Customs Act, 1962 which was upheld leading to this challenge.
Suzlon Energy challenged the order solely for setting aside the confiscation and imposition of penalty on the ground that there was no mis-declaration on their part warranting recourse to section 111(m) of Customs Act, 1962.
The customs authorities stated that adjustment to the ‘third decimal’ would imply addition of another 10% thereof with the consequence of roughly about US$ 750 in value over the entire consignment and hence duty not discharged to that extent. Appellant remitted differential duty liability arising therefrom on value of ₹ 5,07,275.67 assessed at the applicable exchange rate of ₹ 56.2000 per US$ and this is where the crux of the dispute lies.
The tribunal held that in terms of convention relating to currency, and the practice adopted by Central Board of Indirect Taxes and Customs (CBIC) for designated foreign currency, it would appear not. In any case, the enhanced duty liability arising therefrom is not under challenge.
The tribunal stated that there is not an iota of evidence that the goods do not correspond in respect of value with the entry made under this Customs Act, 1962. Consequently, there is no scope for invoking section 111(m) of Customs Act, 1962. With that, the scope for invoking section 112 of Customs Act, 1962 also fails.
The tribunal while allowing the appeal of Suzlon Energy quashed the confiscation and imposition of penalty.
Case Details
Case Title: Suzlon Energy Ltd Versus Commissioner of Customs
Case No.: Customs Appeal No: 89425 Of 2014
Date: 05/12/2024
Counsel For Appellant: Anjali Hirawat
Counsel For Respondent: Deepak Sharma
