Case Law Details
IBM India Pvt Ltd Vs Commissioner of Central Excise & Customs (CESTAT Bangalore)
Introduction: IBM India Pvt Ltd found itself at the center of a Customs Act dispute, appealing against Order-in-Appeal No. 164-181/2013 passed by the Commissioner of Customs (Appeals), Bangalore. The case revolved around the import of computer parts and accessories, the disputed classification by Revenue, and the subsequent imposition of penalty under Section 114A of the Customs Act, 1962.
Detailed Analysis: IBM, the appellant, imported computer parts and accessories, classifying them under specific Tariff Headings and benefiting from Notification No. 06/2006-CE dated 01.03.2006. The Revenue disputed the classification, resulting in the re-classification of products, denial of the notification benefit, and the imposition of differential duty, interest, and penalty under Section 114A of the Customs Act.
The core contention arose regarding the quantum of penalty. The Revenue, in its appeal before the Commissioner (Appeals), contested the penalty determined by arguing that it should be equivalent to the duty and interest payable. The Commissioner (Appeals) allowed the Revenue’s appeal, leading to IBM challenging the decision before the CESTAT Bangalore.
IBM, through its advocate, argued that the inclusion of interest in computing the penalty contradicted legal principles established by the Karnataka High Court and the Tribunal. Referring to the case of CC & ST, Bangalore vs. Sony Sales Corporation and CC (Export), Mumbai vs. Styale Corporation, the appellant asserted that the penalty should be equivalent to either duty or interest, not both.
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