CESTAT Ahmedabad sets aside ₹25,000 penalty under Section 114AA after underlying customs duty demand was held time-barred.
CESTAT Quashes Penalty Based on Time-Barred Demand
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, set aside a ₹25,000 penalty imposed under Section 114AA of the Customs Act, 1962, after determining that the underlying duty demand was time-barred under Section 28.
The Tribunal held that a penalty cannot survive if the principal demand is invalid due to statutory limitation. It emphasized that liability under Section 114AA is parasitic on the legality of the duty assessment.
Practitioner Takeaway: Challenges to penalties must include scrutiny of the validity of the underlying demand. A time-barred assessment automatically invalidates linked penalties, offering a strategic defense in customs litigation.
Citations
- Customs Act, 1962, Section 28, Section 114AA