2004 (12) TMI 443 - AT - Customs

Summary

Issues:
1. Imposition of penalty under Sections 113(d) and (l) of the Customs Act.
2. Allegation of misdeclaration of F.O.B. value and PMV under the DEPB scheme.
3. Interpretation of the term "prohibition" under Section 113(d) of the Customs Act.
4. Prima facie case for waiver of pre-deposit and stay of recovery in respect of the penalty amount.

Imposition of Penalty under Sections 113(d) and (l) of the Customs Act:
The Commissioner of Customs imposed a penalty of Rs. 1 lakh on the appellants under Section 114 of the Customs Act, holding that the subject goods were liable to confiscation under Sections 113(d) and (l) of the Act. The case involved three shipments of Ballpen under the DEPB scheme. While the Department alleged misdeclaration of F.O.B. value and PMV by the party, the Commissioner did not sustain the F.O.B. value misdeclaration but held against the party concerning PMV misdeclaration. The appellants sought waiver of pre-deposit and stay of recovery in relation to the penalty amount.

Allegation of Misdeclaration under the DEPB Scheme:
The Department alleged that the F.O.B. value and PMV of the goods were misdeclared by the party to obtain higher DEPB credit. The Commissioner found misdeclaration of PMV, indicating an intent to secure higher DEPB credit. The party's counsel argued that misdeclaration of PMV did not automatically render the goods "prohibited" under Section 113(d) and that Clause (l) was not applicable as the goods were not within the scope of Chapter IV-B of the Customs Act. The counsel contended that there was no legal prohibition against exporting the goods, emphasizing a strong prima facie case against the penalty.

Interpretation of the Term "Prohibition" under Section 113(d) of the Customs Act:
The Department argued that "prohibition" in Section 113(d) encompassed restrictions, justifying the confiscation of the subject goods. However, the Tribunal found that misdeclaration of PMV, even with the intent to secure higher DEPB credit, did not automatically make the goods "prohibited" under Section 113(d). The Tribunal also noted that the appellant had a prima facie tenable argument regarding the inapplicability of Clause (l) to the situation, as the goods were not classified as "specified goods" under Chapter IV-B of the Customs Act.

Prima Facie Case for Waiver of Pre-Deposit and Stay of Recovery:
After considering the submissions, the Tribunal concluded that the appellants had made out a strong prima facie case against the penalty. It was found that the misdeclaration of PMV, for the purpose of obtaining higher DEPB credit, did not automatically render the goods "prohibited." Therefore, the Tribunal granted the waiver of pre-deposit and stay of recovery as requested by the appellants, based on the strong prima facie case presented.

This detailed analysis of the judgment highlights the issues surrounding the imposition of penalties under the Customs Act, the allegation of misdeclaration under the DEPB scheme, the interpretation of the term "prohibition," and the establishment of a prima facie case for the waiver of pre-deposit and stay of recovery in respect of the penalty amount.