2006 (2) TMI 344 - AT - Customs

Confiscation and penalty - Misdeclaration of goods - Redemption fine and penalty - Quantum of

Summary

Issues:
1. Penalty imposed under Section 112 of the Customs Act for failure to declare actual quantity and value of consignment.
2. Contention of clerical error by the importer.
3. Intention to evade duty by both parties.
4. Justification of confiscation and penalty.
5. Reduction of penalty amount.

Analysis:
1. The judgment deals with two appeals challenging a penalty imposed under Section 112 of the Customs Act on an importer and a Customs House Agent (CHA) for failing to declare the actual quantity and value of a consignment. The appellants had declared one item in the Bill of Entry, but upon examination, it was found to contain three items. This discrepancy led to penal action under Sections 111 and 112 of the Customs Act.

2. The appellants argued that the discrepancy was due to a clerical error by the supplier, as the invoice showed only one item. However, both authorities rejected this plea, noting that the Airway Bill clearly indicated three items. The judgment concluded that the error was not clerical but intentional, as the appellants were aware of receiving three items and the duty on the additional items would have been substantial.

3. The judgment addresses the intention to evade duty by both parties, emphasizing that they could have avoided the discrepancy by examining the goods before filing the Bill of Entry. The intentional nature of the act was highlighted, suggesting that the appellants' actions were aimed at evading duty, which would have resulted in a significant loss of revenue.

4. The justification for confiscation and penalty was based on the clear awareness of the appellants regarding the actual quantity of items received. The judgment upheld the penalty but considered a reduction in the penalty amount. The importer's high annual duty payment was cited as a reason for reducing the penalty to serve as a warning for future compliance.

5. The judgment ultimately reduced the penalty amount for each party to Rs. 10,000, considering the high duty paid by the importer and the relatively small amount that would have been evaded. The decision modified the impugned order to reflect the reduced penalty amount, emphasizing the need for careful compliance in the future to avoid penalties and confiscation.