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

Under section 114A of the Customs Act, 1962, duty of Rs 10,00,000 was determined payable under section 28(8) on account of suppression of facts. The importer paid nothing within 30 days and appealed. The Appellate Tribunal reduced the duty to Rs 6,00,000, and the order was confirmed. Ignoring interest, what is the penalty under section 114A?

The penalty is Rs 6,00,000. Section 114A fixes the penalty equal to the duty, and its proviso says that when the Tribunal reduces the duty, the reduced duty is used. The twenty-five per cent concession is unavailable because nothing was paid within thirty days.

  1. ARs 10,00,000, based on the original demand
  2. BRs 6,00,000, based on the duty as reducedCorrect
  3. CRs 1,50,000, being 25% of the reduced duty
  4. DRs 3,00,000, being 50% of the reduced duty

Explanation

A proviso to section 114A states that where the determined duty is reduced by the Commissioner (Appeals), the Tribunal or the court, the duty as reduced is taken into account. The penalty equals this duty, so it is Rs 6,00,000. The 25% concession needs timely payment within 30 days, which did not happen. Using Rs 10,00,000 ignores the reduction proviso.

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