Chapter 15 Advance Ruling, Settlement Commission, Appellate Procedure, Offences and Penalties – CS Professional Advance Tax Law Notes is designed strictly as per the latest syllabus and exam pattern.
Advance Ruling, Settlement Commission, Appellate Procedure, Offences and Penalties – CS Professional Advance Tax Law Study Material
Question 1.
Mention the categories of persons who can be searched by the proper officer of customs under section 100 of the Customs Act, 1962. (June 2014, 5 marks)
Answer:
Under section 100 of the Act where the proper officer of the Customs has reason to believe that the following categories of persons have secreted any goods, liable to confiscation or any documents thereto, he may search such persons.
The categories of persons referred to in the above paragraph are:
(a) any person who has landed from or is about to board or is on board any vessel within the Indian Customs waters;
(b) any person who has landed from-or is about to board or is on board a foreign-going aircraft;
(c) any person who has got out of or is about to get into or is in vehicle, which has arrived from or is to proceed to any place outside India;
(d) any person not included in clauses (a), (b) or (c) who has entered or is about to leave India;
(e) any person in a customs area.
Question 2.
Mention with reasons where the appeal/revision application will lie against the following orders:
(a) Order passed by the Commissioner of Customs (Appeals) rejecting the application for duty drawback.
(b) Order passed by the CESTAT disallowing the benefit of SSI Notification to a proprietary concern providing services. (Dec 2014, 2 marks each)
Answer:
(a) In terms of Sections 129A(1) of Customs Act, any person aggrieved by decision or order of Commissioner of Customs (Appeals) may file appeal to CESTAT. However, appeal cannot be filed before CESTAT if the matter relates to Duty Drawback.
However, under Section 129DD of the Customs Act, the appeal against the order of Commissioner (Appeals), in cases of duty drawback lies with the Central Government which is the Revision Authority (instead of CESTAT), Further, the Revision Authority may refuse to admit an application if differential duty, fine and penalty involved does not exceed ₹ 5,000.
(b) Appeal to High Court on a question of law and also to Supreme Court (by permission of High Court or SLP)
Question 3.
Mention the amount which is required to be deposited mandatorily before filing an appeal before the Commissioner (Appeals) and CESTAT under the Customs Act, 1962. (June 2015, 3 marks)
Answer:
The mandatory pre-deposit is as follows:
(a) 7.5% of duty or penalty is made if appeal is filed before Commissioner (Appeals).
(b) 7.5% of duty or penalty is made if appeal is filed before CESTAT against order of Principal Commissioner/Commissioner as adjudicating authority,
(c) 10% of duty or penalty is made if appeal is filed before CESTAT against order of Commissioner (Appeals). The pre-deposit shall not exceed ₹ 10 crores.
Question 4.
What do you mean by the following specific terms used within the meaning of the Customs Act, 1962:
(i) Adjudicating Authority (Dec 2017, 1 mark)
Answer:
“Adjudicating Authority” means any authority competent to pass any order on decision under this Act, but does riot include the Board, Commissioner (Appeals) or Appellate Tribunal.
Question 5.
Specify the conditions when can an appeal be filed before the Appellate Tribunal as per section 129-A under the Customs Act, 1962. State also all those matters for which the Appellate Tribunal does not hold jurisdiction under the Customs Act, 1962. (Dec 2021, 6 marks)
Answer:
Person aggrieved by any of the following orders es per Section 129-A of the Customs Act, 1962 may appeal to the Appellate Tribunal against:
(a) a decision or order passed by the Commissioner of Customs as an adjudicating authority;
(b) an order passed by the Commissioner (Appeals) under Section 128A;
(c) an order passed by the Board or the Appellate Commissioner of Customs under Section 128;
(d) an order passed by the Board or the Principal Commissioner of Customs under Section 130.
Provided that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in clause (b), if such order relates to:
(a) any goods imported or exported as baggage;
(b) any goods loaded in a conveyance for importation into India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at any such destination if goods unloaded at such destination are short of the quantity required to be unloaded at that destination;
(c) payment of drawback as provided in Chapter- X, and the rules.
Question 6.
Whether an application can be made in the following cases before the Settlement Commission under section 127B of the Customs Act, 1962:
(i) The additional amount of duty accepted by the applicant is ₹ 3,00,000.
(ii) The goods involved are gold and gold jewellery.
(iii) Case involves interpretation of classification of goods under the Customs Tariff Act, 1975. Give answer with reasons. (June 2013, 6 marks)
Answer:
(i) No, since the additional amount of duty accepted by the applicant does not exceed ₹ 3,00,000.
(ii) No, according to Section 127B, application can not be entertained in respect of goods to which Section 123 of the Customs Act applies.
(iii) No, according to Section 127B of the Customs Act, no application shall be made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975.
Question 7.
While conducting search and seizure in the premises of Alpha Ltd., the officials recovered large quantity of chemicals. It was found that the chemicals were imported into India without any import license. After adjudication, penalty was imposed and the chemicals were confiscated. However, the Department gave an opportunity to the company to get back the goods after paying fine and duty at the prescribed rate. During the period, the Department notified the chemicals as exempted from customs duty. The assessee claimed the benefit of exemption notified.
Give your opinion whether the claim of Alpha Ltd. is tenable? Discuss in the light of a relevant case law. (Dec 2016, 5 marks)
Answer:
The exemption notification is applicable only to imported goods. Imported goods means any goods brought into India through proper channel and licence. Goods imported without a licence are goods imported contrary to prohibitions under customs law. Such goods are liable to confiscation under section 111 (d) of the Customs Act. Moreover, Customs Act defines imported goods and smuggled goods separately.
Hence, there are two classes of goods. The smuggled goods are not imported goods. Therefore, the exemption notification is not applicable to the assessee who imported the goods without license. This was pronounced by the Apex Court in the case of CC v/s M. Ambalal & Co. (2010) 206 ELT 487 (SC).
Question 8.
Importer BOPPA Ltd. imported two consignments of ethyl alcohol which were allowed to be cleared for home consumption on execution of a bond undertaking to produce licence within a month. Since, BOPPA Ltd. failed to fulfill the obligation, proceedings were initiated which culminated in confiscation of the goods under Section 111 (d) of the Customs Act, 1962 and imposition of penalty on the importer under Section 112(a) of the Customs Act, 1962. Examine the correctness of the decision in terms of statutory provisions. (Dec 2018, 5 marks)
Answer:
The given case is similar to the case of Hira Lai Hari Bhagwati vs. CBI (2003) 155 ELT433 (SC). The Supreme Court of India had held that no penalty can be imposed if the goods are imported with bonafide belief that they are entitled to exemption, later on they could not fulfil conditions of exemptions but paid the duty.
Further it was held that for establishing offence of cheating, complainant (i.e. importer) is required to show dishonest intention at the time of making promise of presentation. Thereby there is no penalty under Section 112(a) of Customs Act, 1962. With regard to confiscation of the goods under Section 111 (d) of Customs Act, 1962, the Supreme Court in the case of Sachinanda Banerji v Sitaram Agarwala 110 ELT 292 (SC), held that goods imported against restrictions under Section 11 of the Customs Act, 1962 (Section 11 deals with power to prohibit importation or exportation of goods) are liable to confiscation. Therefore, action of the department to confiscate the goods u/s 111 (d) of the Customs Act, 1962 is valid.
Question 9.
Yash an importer, imported certain goods on 10th April, 2019 and paid custom duty by understating the value of goods imported. A show cause notice was issued on Yash by the proper officer on 9th August, 2019 demanding duty along With interest and penalty on the value of goods understated. The said notice was received by Yash on 14th August, 2019. Yash deposited the amount of duty and interest along with penalty that should be payable as per provisions of law on 11th September, 2019. With reference to section 28AA of the Customs Act, 1962 explain the provisions for imposition of interest and penalty, if any. Also give reasons for your answer. (Dec 2018, 5 marks)
Answer:
Where notice under Section 28(1)(a) of the Customs Act, 1962 has been served for short/non levy or erroneous refund of duty or interest, for reason other than the reasons of collusion or any wilful misstatement or suppression of facts, penalty will not be imposed. If the proper officer is of the opinion that the amount of duty along with interest leviable under Section 28AA or the amount of interest, as the case may be, as specified in the notice, has been paid in full within 30 days from the date of receipt of notice. The proceedings in respect of such person or other persons to whom the notice is served will be deemed to be concluded.
Further, if the notice is served in respect of collusion, any mis-statement or suppression of facts for duty or interest which has not been so levied, or short levied or short paid or to whom refund has erroneously been made and the person make payment is full and penalty equal to 15% of the duty specified in the notice within thirty days of the receipt of notice and inform the proper officer, then the proceedings in respect of such person shall be deemed to be conclusive as to the matter stated therein.
In the given case, show cause notice was received by Mr. Yash on 14.08.2019 and he paid the duty, interest and applicable penalty on 11.09.2019, which is within 30 days of the receipt of the notice, therefore, if Mr. Yash has understated the value of imported goods with a fraudulent intention and has informed the proper officer of the payment made by him, in writing, in view of the above mentioned provisions, penalty leviable on Mr. Yash will be 15% of the duty specified in the notice. However, if Mr. Yash has understated the value of imported goods on account of bonafide reasons, no penalty will be impossible on him.
Advance Ruling, Settlement Commission, Appellate Procedure, Offences and Penalties Notes
Advance Ruling” [Section 28E(b)]
“advance ruling” means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation
Applicant [Section 28E(c)]
“applicant” means any person,-
- holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or
- exporting any goods to India; or
- with a justifiable cause to the satisfaction of the Authority,
Binding nature of Advance Ruling (Section 28J)
An Advance Ruling pronounced by the authority under section is binding only-
- To the applicant; and
- In respect of any matter referred to in sub-section (2) of Section 28H;
- On the Principal Commissioner/Commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant.
The Advance Ruling is valid for three years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced whichever is earlier
Appellate Tribunal
The Appellate Tribunal constituted by the Central Government under section 129(1) of the Act.
Cognizable offence
A case in which a customs officer may arrest without warrant
Non-cognizable offence
A case in which customs officer has no authority to arrest without warrant
Search
An action of a government machinery to go, look through and examine carefully a place, area, object etc. to find something concealed or for the purpose of discovering evidence of a crime.
Seizure
The act of taking possession of the property by an officer forcibly under legal process
Smuggling
Any act or omission which will render such goods liable for confiscation under section 111 to 113 of the Act.