CESTAT New Delhi Sets Aside Penalty On Time Avenue, Finds No Link To Importer's RSP Misdeclaration

The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 10 April set aside a penalty of Rs. 20,000 imposed on Time Avenue Pvt. Ltd. under Section 112(b) of the Customs Act.

A Bench comprising President Justice Dilip Gupta and Technical Member Hemambika R. Priya held that the penalty under Section 112(b) could not be sustained in the absence of proof that the appellant knew the goods were liable to confiscation.

The Tribunal observed:

“There is no documentary evidence that may indicate that the appellant had any knowledge of the declaration of RSP at the time of import. Thus, penalty under section 112(b) of the Customs Act could not have been imposed on the appellant.”

Time Avenue Pvt. Ltd., engaged in the retail sale of watches, had purchased the watches locally from Richemont India Pvt. Ltd. During an investigation into the alleged misdeclaration of RSP by certain importers of Swiss-origin branded watches, customs officers searched Time Avenue's premises and seized six watches. They thereafter issued a show cause notice proposing confiscation and penalty.

Time Avenue contended that it had made local purchases against VAT invoices and had no knowledge of the RSP declared by the importer at the time of import. It further stated that any change in price tags was based on revised price lists issued later by the importer.

The Bench held that there was no evidence to show that the retailer knew that the importer had misdeclared the Retail Sale Price (RSP) of imported watches.

Accordingly, the CESTAT accepted this contention, set aside the order of the Commissioner (Appeals), and allowed the appeal.

Appearance for the Appellant: Shri Stebin Mathew and Ms. Dishya Pandey, Advocates

Appearance for the Department: Shri Ratnesh Kumar Mishra, Authorised Representative