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CA Final · Indirect Tax Laws · Levy of and Exemptions from Customs Duty

Himalaya Gems Ltd had a penalty levied on it under section 114A for duty short-levied by wilful mis-statement. The department also proposes to levy a penalty for the same default under section 112. What is the correct position under the Customs Act, 1962?

No penalty under section 112 or section 114 can be levied. The last proviso to section 114A says that once a penalty has been levied under section 114A, no penalty may be levied under section 112 or section 114 for the same default, preventing double penalty.

  1. ABoth penalties can be levied cumulatively, subject to a total cap of twice the duty
  2. BOnly a penalty under section 112 may be levied, as it is the general provision
  3. CNo penalty under section 112 or section 114 can be levied where a penalty is levied under section 114ACorrect
  4. DA penalty under section 112 can be levied if the duty exceeds Rs 10 lakh

Explanation

The last proviso to section 114A states that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. So the section 112 proposal fails. The other options assume cumulation or a threshold that the section does not provide.

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