Indirect Taxes

PENALTIES

Penalty for improper importation of goods³⁵
A person, who in relation to imported or exported goods commits to certain acts or omission which would render such goods liable for confiscation or who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation, shall be liable for penalty in the following manner:
1. The goods in respect of which any prohibition is in force under any law for the time being in force shall be liable to a penalty not exceeding the value of the goods or Rs. 5,000/-, whichever is the greater
2. In case of dutiable goods, other than prohibited goods, penalty not exceeding 10% of the duty sought to be evaded or ₹5,000/-, whichever is higher
3. In the case of goods in respect of which the value stated in the Bill of entry or export bill or shipping bill or in the case of baggage, in the declaration, is higher than the value thereof, a penalty not exceeding the difference between the declared value and the value thereof or ₹5,000/-, whichever is the greater.
Penalty for attempt to export of goods improperly³⁶
Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation, or abets the doing or omission of such an act, shall be liable to penalty in the following manner:
1. In case of goods in respect of which any prohibition is in force under any law for the time being in force, penalty not exceeding 3 times the value of the goods as declared by the exporter or the value as determined under Customs Act, whichever is the greater;
2. In case of dutiable goods, other than prohibited goods, a penalty not exceeding 10% of the duty sought to be evaded or ₹5,000/-, whichever is higher
  If the duty alongwith interest as demanded under Section 28 of the Customs Act is paid within 30 days from the date of communication of order, penalty shall be 25% of the total penalty.
3. In the case of any other goods, a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under Customs Act, whichever is the greater.
Penalty for non-payment of duty due to fraud, collusion, misstatement with intent to evade duty (Section 114A):

Particulars	Penalty in Bona fide cases	Penalty in Mala fide cases
Cases covered	Cases other than Collusion Wilful mis-statement Suppression of facts	Cases of Collusion Wilful mis-statement Suppression of facts
Non-levy/Non-payment/Short-levy/Short-payment/Erroneous refund of Custom Duty	No penalty	Penalty equal to 100% of Custom Duty
Custom Duty with interest paid within 30 days from the date of service of SCN	No penalty	Reduced penalty of 15% of Custom Duty provided such reduced penalty is also paid within 30 days from the date of service of SCN
Custom Duty with interest and reduced penalty as above is paid within 30 days from the date of receipt of Adjudication Order	25% of Custom Duty	25% of Custom Duty
If Commissioner (Appeals), Appellate Tribunal or Court increased Custom duty liability, penalties have to be modified accordingly. Benefit of reduced penalties shall be made available provided Custom duty, interest and reduced penalty is paid within 30 days from the date of receipt of the Order increasing Custom Duty liability

For use of false and incorrect materials
As per Section 114AA, if any person knowingly or intentionally makes, signs, or uses or causes to be made, signed or used, any declaration, statement or document which is false or is incorrect in any material particular, he shall be liable for penalty not exceeding 5 times the value of goods.
Penalty for obtaining instrument by fraud, etc. (Proposed insertion of new Section 114AB videFinance Bill, 2019)
Any person who has obtained any instrument by fraud, collusion, wilful misstatement or suppression of facts and such instrument has been utilized by such person or any other person for discharging duty, then penalty shall be imposed on such person up to the face value of instrument.
General Penalty for contravention, etc., not expressly mentioned:
If any person who contravenes any provision of the Customs Act or abets any such contravention or who fails to comply with any provision of the Act, where no express penalty is elsewhere provided for such contravention or failure, shall be liable to a penalty not exceeding ₹ 1,00,000/- under Section 117.

It may be noted that vide Finance Bill, 2019 maximum limit of general penalty is proposed to be increased from ₹ 1,00,000/- to ₹ 4,00,000/-.