Legal principle

Where the importer is eligible to avail credit of the duties paid so that the case is revenue-neutral, interest, confiscation, redemption fine and penalty cannot be sustained even though the confirmation of duty itself remains undisturbed.

Court decision

The Tribunal partly allowed the appeal of Acer India: following UOI Vs Mahindra & Mahindra Ltd. - 2023 (8) TMI 135 (SC), it set aside the demand of interest on the total differential duty of Rs.4,81,74,877, and for the same reason set aside the confiscation of goods and the redemption fine; it also set aside the penalty of Rs.5,85,04,608 under Section 114A (and the penalties imposed generally). The impugned order was modified by setting aside the interest demand, confiscation, redemption fine, penalties and appropriation of interest paid, while expressly not disturbing the confirmation of duty.

Facts

Acer India Pvt Ltd imported 36,750 laptops vide 13 Bills of Entry in 2013 under CTH 84713010 at declared transaction value of USD 277.48 (Rs.16,427) per piece for supply to M/s.Rajcomp Info Services Ltd. (a Rajasthan Government undertaking) under a tender for school students, paying CVD on declared MRP of Rs.14,999 and claiming BCD and SAD exemptions. After import, the appellant loaded software (Adobe, MS Visio) on 11,236 laptops at its Chennai warehouse and repacked them in cartons. On specific intelligence, SIIB officers investigated and alleged the appellant had suppressed the sale price by misdeclaring the MRP to evade Customs duty, and that loading software and repacking amounted to 'manufacture' under Section 2(f)(i) & (iii) of the Central Excise Act read with Sl.No.74A of the Third Schedule to CETA. A Show Cause Notice dated 26.08.2015 proposed differential duty of Rs.4,81,74,877 with interest, confiscation under Section 111(m) and penalties under Sections 112 and 114A of the Customs Act, and the Commissioner of Customs, Chennai II confirmed these proposals in Order-in-Original No.45282/2016, prompting this appeal.

Key provisions

• Section 12, Customs Act, 1962 — Dutiable goods
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 3A, Customs Tariff Act, 1975 — Omitted [****]
• Section 28AB, Customs Act, 1962 — [Omitted] ****
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 2, Customs Act, 1962 — Definitions
• Section 9A(8), Customs Tariff Act, 1975 — Anti- dumping duty on dumped articles
• Section 127C, Customs Act, 1962 — Procedure on receipt of an application under Section 127B
• Section 3(8), Customs Act, 1962 — Classes of officers of customs
• Section 28(2), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded