The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal, in the case M/s. Citibank N.A. Versus Commissioner of Customs observed and has deleted the penalty imposed under the Customs Act against CitiBank on the purchase of an ATM within India.
The two-member bench of Judicial Member, Suvendu Kumar Pati and the Accountant Member, Sanjeev Shrivastava observed and has stated that a transaction concerning the purchase of an item within India, which is being unrelated to its importation and to the importer as the stated transaction is being confined between the Philips India and Appellant Citibank and the same does not support the penalty which is imposed under Section 112 of the Customs Act against Citibank.
In the present case, the assessee/appellant is engaged in carrying out activities related to banking services at its various branches located in India and has purchased 12 number of ATMs and 6 number of ATM Controllers in July 1998 from Philips India. Thus, the then Collector of Customs, Air Cargo Complex, Sahar, Mumbai, issued a show cause notice has been issued, wherein alleging that those ATMs and ATM controllers were being supplied to Philips India to the appellant after they were being imported by a firm or a company of Mr. Jiten P. Mody by mis-declaration of description and value of goods with respect violation of import policy and without importing license.
However, the notice issued has also proposed the confiscation of machines under Section 111(d) and (m) of the Customs Act, 1962. The present matter was adjudicated and a penalty of Rs. 1,50,00,000 was being imposed on Citibank. Further, the penalties for an amount of Rs. 40, 000 for each of the two consignments were also imposed on the customs broker and without issuing of any show-cause notices to him.
It has been argued by the assessee that Citibank is just a purchaser who is purchasing those ATMs through local sale invoices raised by Philips India, and it has nothing to do in relation with the importation of goods made by Jiten P. Mody wherein alleging supplied to Philips India. It was observed that no statement of any officer or executive employee of the appellant bank was being recorded and based on the statements of Mr. Jiten P. Mody as well as some employees of Philips of India, in this case the appellant has been implicated and after a reply has been tendered by the appellant to the show-cause notice, nothing was being done by the department between the year 1992 and 2007 till an order-in-original was being issued on 30.11.2007.
It has been contended by the department that the investigation made by DRI had unearthed the evil design of the appellants in importing of the ATM machines without giving an import license and in relation with misdeclaration for the purpose of evading the customs duty.
Accordingly, the tribunal observed and has held that Citibank being a subsequent purchaser of the goods from Philips India, which had allegedly purchased the imported goods from Jiten P. Mody. Except for the statement of Ramamrutham, a former Philips India employee, it has been stated that they considered the possibility of importing ATMs from Philips Holland to Philips India through third-party suppliers and after the quotations were obtained from the said importer, Jiten P. Mody, the price quoted of the machine to banks namely Citibank and HSBC with a profit margin of 40%.