1998 (12) TMI 430 - AT - Customs

Summary

Issues:
1. Confiscation of goods due to undervaluation.
2. Imposition of fine and penalty on the importer.
3. Interpretation of Section 111(m) of the Customs Act, 1962.
4. Bona fide belief of importer regarding duty payment.

Issue 1: Confiscation of goods due to undervaluation
The ld. Commissioner of Customs (Appeals) upheld the confiscation of goods and imposition of a fine and penalty on the importer, who had filed a Bill of Entry declaring a lower value for Oscillator Valve ITK-200-1 compared to the actual value as per the manufacturer's invoice. The total value of the goods was Rs. 4,59,531, with an under-valuation of approximately Rs. 2,70,000, leading to an evasion of duty amounting to Rs. 1,85,000. The lower authorities confiscated the goods and allowed redemption on payment of a fine of Rs. 2,50,000 and imposed a personal penalty of Rs. 1,50,000.

Issue 2: Imposition of fine and penalty on the importer
The importer argued that they had declared the value in the Bill of Entry based on the invoices, believing it to be the correct transaction value for duty payment. The importer contended that there was no malafide intent in declaring the value as per the invoice and that they genuinely believed duty was payable only on the invoice value. The Appellant's counsel submitted that the penalty was unwarranted as the importer acted in good faith. In contrast, the JDR representing the respondent argued that the goods were rightly confiscated, and the penalty was justified due to the clear misdeclaration of value, violating Section 111(m) of the Customs Act, 1962.

Issue 3: Interpretation of Section 111(m) of the Customs Act, 1962
The Appellate Tribunal noted that the importer had prepared the Bill of Entry based on the invoice value, which was reduced due to a warranty provided by the foreign supplier. The Tribunal considered this discrepancy to be a bona fide mistake on the part of the importer. It was observed that the importer cooperated by providing necessary documents when requested. Ultimately, the Tribunal confirmed the duty demand but set aside the confiscation of goods and the imposition of penalty, recognizing the importer's genuine belief regarding duty payment based on the invoice value.

Issue 4: Bona fide belief of importer regarding duty payment
The Tribunal concluded that the importer's declaration based on the invoice value, considering the warranty adjustment, was a genuine mistake made in good faith. Despite being regular importers, the Tribunal found no mala fide intent on the part of the importer to evade duty payment. Consequently, the Tribunal ruled in favor of the importer, setting aside the confiscation of goods and the penalty, while confirming the duty demand. The importer was entitled to any consequential relief as per the law.

In conclusion, the Appellate Tribunal's judgment addressed the issues of undervaluation, imposition of penalties, interpretation of relevant legal provisions, and the importer's bona fide belief in duty payment, providing a detailed analysis and ruling in favor of the importer based on the circumstances and facts of the case.