Case Law Details
Honda Cars India Limited Vs Principal Commissioner of Customs (CESTAT Delhi)
In the case of Honda Cars India Limited Vs Principal Commissioner of Customs, the appellant, Honda Cars India Limited, imported drawings and designs on paper made with the aid of computer between April 2016 to March 2018. They filed Bills of Entry, claiming classification of the goods under Customs Tariff Item (CTI) 4906 00 00 and sought exemption from payment of Basic Customs Duty (BCD) under certain notifications. An investigation by the Directorate of Revenue Intelligence (DRI) concluded that the goods should be classified under CTI 4911 99 20, not the classification claimed by the appellant. The appellant admitted the misclassification and deposited the differential BCD and interest. The Customs department initiated proceedings seeking confirmation of the differential duty, interest, and penalties.
The appellant argued that penalties under Section 114A of the Customs Act, 1962, couldn’t be imposed as there was no collusion or wilful misstatement. They also claimed they should benefit from the reduced penalty of 15% of the BCD amount, paid within thirty days of receiving the show cause notice (SCN).
The Revenue argued that penalties were justified as the differential BCD was paid during the investigation. They contested the applicability of the reduced penalty, stating it wasn’t paid within the prescribed timeframe.
The Tribunal considered both arguments and examined the case records. It noted that the appellant accepted the DRI’s classification without contesting it and voluntarily paid the differential BCD and interest. The reduced penalty under Section 28(5) of the Customs Act was also paid by the appellant. The Tribunal found the department’s invocation of penal provisions under Section 114A justified.
Regarding the payment of the reduced penalty beyond the prescribed thirty days, the Tribunal invoked Section 10 of the General Clauses Act, 1897, which allows actions due on holidays to be performed on the next working day. Since the payment was made on December 16, 2019, following bank holidays on December 14th and 15th, it was considered within the stipulated timeframe.
The Tribunal cited the Gujarat High Court’s ruling in Prakash Dimond Pvt. Ltd. Vs. Union of India, where it held that if the last day for an action falls on a holiday, it can be performed on the next working day. Applying this principle, the Tribunal set aside the impugned order’s equal penalty imposition, allowing the appellant to pay the reduced penalty of 15%, which they had already complied with.
In summary, the Tribunal upheld penalties imposed by the Customs department but allowed the appellant to benefit from the reduced penalty payment made within a reasonable timeframe, considering statutory provisions and previous legal precedents.
FULL TEXT OF THE CESTAT DELHI ORDER
Briefly stated, the facts of the case are that during the period between April 2016 to March 2018, the appellant had imported ‘drawings and designs on paper made with aid of computer’ and filed the Bills of Entry, claiming classification of the said goods under Customs Tarriff Item (CTI) 4906 00 00. The appellant had also claimed the exemption from payment of Basic Customs Duty (BCD) in terms of Notification No. 12/2012-Cus., dated 17.03.2012 read with Notification No. 50/2017-Cus., dated 30.06.2017. The officers of Directorate of Revenue Intelligence (DRI), Cochin Zonal Unit, initiated an investigation against the appellant in context with importation of the subject goods. The DRI had concluded that the imported goods should appropriately be classifiable under CTI 4911 99 20, instead of the classification claimed by the appellant under CTI 4966 00 00. During the course of investigation, the appellant had admitted the fact that it had wrongly classified the imported goods and accordingly, had deposited an amount of Rs.1,70,89,364/- into the government exchequer towards the differential BCD and interest. Based on the investigation report of the DRI, the jurisdictional Customs department had initiated show cause proceedings against the appellant, seeking for confirmation of the differential duty, interest and also proposed for imposition of penalties on the appellant. Upon issuance of the show cause notice (SCN), the appellant had deposited an amount of Rs.26,58,857/- towards 15% penalty under Section 28(5) of the Customs Act, 1962. The matter arising out of the SCN dated 06.11.2019 was adjudicated by the learned Commissioner of Customs, Air Cargo Complex, New Delhi vide the Order-in-Original No. 21/2020/UG/Principal Commissioner dated 29.05.2020 (for short, referred to as ‘the impugned order’), in confirming the proposals made in the SCN. Feeling aggrieved with the impugned order, the appellant has preferred this appeal before the Tribunal.
2. Learned Advocate appearing for the appellant submitted that the provisions of Section 114A ibid cannot be invoked for imposition of penalty inasmuch as non-payment of the BCD amount at the time of assessment was not owing to the reason of collusion or any wilful misstatement or suppression of facts. Further, he submitted that since the reduced amount of penalty of 15% of the BCD amount was paid within thirty days from the date of receipt of the SCN, the benefit provided under Section 28(5) ibid should be available to the appellant and the impugned order, confirming equal amount of BCD as the quantum of penalty cannot be sustained.
3. On the other hand, learned AR appearing for the Revenue reiterated the findings recorded in the impugned order and further submitted that since the differential amount of BCD was paid during the course of investigation by the DRI, the appellant is exposed to the penal consequences provided under 114A ibid. Further, learned AR also submitted that the benefit of payment of reduced amount of penalty in terms of sub-section (5) of Section 28 ibid should not be available to the appellant inasmuch as the reduced amount of penalty was not paid within the prescribed time frame of thirty days from the date of receipt of the SCN.
4. Heard both sides and examined the case records.
5. It is an admitted fact on record that classification of the disputed goods adopted by the DRI under CTI 4911 99 20 was accepted by the appellant inasmuch as no challenge was made with regard to classification of the subject goods under CTI 4906 00 00. Further, no evidences are available on record to show that the appellant had bona-fide intention in claiming wrong classification of the disputed goods and availment of the exemption from payment of the BCD under the notification dated 17.03.2012 read with notification dated 30.06.2017. It is also an undisputed fact that the appellant had voluntarily paid the differential BCD and interest amount upon detection of wrong classification by the DRI. The reduced penalty amount as per subsection (5) of Section 28 ibid was also paid suo-moto by the appellant, consequent upon receipt of the SCN. Thus, it cannot be said that the department’s action in invoking the penal provisions under Section 114A ibid is not proper or justified.
6. We find that the impugned order at paragraph 55 has acknowledged the fact that the appellant had paid an amount of Rs.21,64,600/- towards 15% penalty on 16.02.2019. However, the benefit of such reduced penalty as per sub-section (5) and (6) of Section 28 ibid was not extended to the appellant on the ground that the reduced penalty of 15% was paid beyond the period of thirty days from the date of receipt of the SCN. The SCN was received by the appellant on 15.11.2019 and thereafter, the reduced amount of penalty was paid on 16.12.2019. It is a fact that such deposit was made beyond the prescribed time frame of thirty days. The appellant has stated that the penalty amount was paid by it on 16.12.2019, owing to the reason that 14th/15th were bank holidays, being second Saturday and Sunday and that on the next available working day i.e., 16th December, the amount was deposited into the Central Government Account. Insofar as computation of the time limit for such type of delay is concerned, Section 10 of the General Clauses Act, 1897 has mandated that if the Court or office is closed on the date of limitation for presentation of records/documents, then on the next working day, the same can be filed or produced before the authorities. The relevant statutory provision is quoted herein below:
“10. Computation of time.—(1) Where, by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open:”
7. In the case in hand, since 14th and 15th of December were being holidays as second Saturday and Sunday, payments made by the appellant in the designated bank on 16.12.2019 would be considered as the deposit made within the stipulated time frame. Since, the appellant has complied with the requirement of sub-section (5) read with sub-section (6) of Section 28 ibid, in our considered view, payment of reduced amount of penalty @15% of the BCD amount would be considered as sufficient compliance in terms of the statutory provisions. Since, the appellant in this case had deposited such reduced amount of penalty, as per Section 10 of the General Clauses Act, 1897 read with Section 28 ibid, in our considered view, such deposit should meet the ends of justice for the purpose of the benefit provided for reduction in the quantum of penalty. Thus, the impugned order, imposing equal amount of penalty shall not be sustained for judicial scrutiny.
8. The issue with regard to computation of the limitation period came up before the Hon’ble Gujrat High Court in the case of Prakash Dimond Pvt. Ltd. Vs. Union of India and the Hon’ble Court by order dated 03.05.2010, (reported in 2010 (5) TMI 489-Gujrat High Court) has held that if the last date of a period within which an act is to be performed is a holiday, then the last date would be extended to the immediate next working day and the act would be said to be in compliance, if the same is performed on the immediately next working day by invoking the provisions of Section 10 of the General Clauses Act. The relevant paragraph in the said order is extracted herein below:
“9. From the averments made in the petition, which have not been denied in the affidavit in-reply, it is apparent that the petitioner had deposited the demand drafts dated 19-12-2009 as detailed in the letter dated 24th December, 2009 (Annexure-F) with the Bank of Baroda vide TR-6 challans dated 29-12-2009. Thus, the petitioner had divested itself of the funds and the bank was in possession of funds which would be handed over the moment draft was presented and demand made. The Order-in-original is dated 26-11-2009, hence the period of thirty days from the date of the order would expire on 2712-2009. As pointed out by the learned advocate for the petitioner, 27th and 28th December 2009 were holidays. Immediately on the next day thereafter, the petitioner has obtained TR-6 challans and deposited the demand drafts with the Bank. Hence, if the time stipulated under the said order is computed in terms of Section 10 of the General Clauses Act, the period stipulated in the order would stand extended till the next working day, that is, 29th December 2009, on which date, admittedly the petitioner had obtained the TR-6 challans and thereafter deposited the demand draft with the Bank on the very next day. In the circumstances, it cannot be stated that there is non-compliance of the order dated 26th November 2009. In the aforesaid premises, the respondents are not justified in denying redemption of the goods in question to the petitioner on the ground that the Order-in-Original has not been complied with.”
9. In view of the foregoing discussions, the impugned order to the extent it has confirmed equal amount of penalty on the appellant is set aside and the appeal to such extent is allowed in favour of the appellant, holding that the appellant would be liable to pay the reduced amount of penalty at the rate of 15%, which they have already complied with.
(Order pronounced in open court on 30.04.2024)
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