2006 (4) TMI 454 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of goods.
2. Undervaluation of consignment.
3. Legality of export without a special license.
4. Confiscation and penalties imposed.
5. Right to redeem confiscated goods.

Detailed Analysis:

1. Misdeclaration of Goods:
The primary issue involved was the misdeclaration of the export consignment. The appellant, M/s. Universal Traders, declared the goods in ten drums as 'Perfume Attar-Raat Rani' with an export price of approximately Rs. 1.4 lakhs. However, upon investigation and testing by the Customs authorities, it was confirmed that the consignment contained Sandalwood Oil of varying purities, not the declared item. The evidence included the test results from the Indian Institute of Technology, Mumbai, which confirmed the presence of Sandalwood Oil in the consignment. The appellant's own admissions during the investigation further supported the misdeclaration charge, as they knowingly misdeclared the goods to circumvent export restrictions and customs duties.

2. Undervaluation of Consignment:
The consignment was also found to be undervalued. Based on the prices indicated by forest authorities, the consignment's actual value was approximately Rs. 25 lakhs, significantly higher than the declared value of Rs. 1.4 lakhs. This undervaluation was admitted by the appellant, who stated that the goods were under-invoiced to avoid customs duty at Dubai.

3. Legality of Export Without a Special License:
Export of Sandalwood Oil is restricted and requires a special license from the Forest Department and DGFT. The appellants did not possess such a license, thus violating export laws. The appellant's explanation that the goods were prepared by mixing local base oil with Sandalwood Oil did not absolve them of the requirement to obtain the necessary export licenses.

4. Confiscation and Penalties Imposed:
The Commissioner of Customs adjudicated that the appellants had knowingly misdeclared the goods and undervalued the consignment. Consequently, the consignment was absolutely confiscated, and penalties were imposed on the appellants under Section 114(i) of the Customs Act, 1962. The penalties included Rs. 5,00,000 on the exporter, Rs. 2,00,000 on Usman Abdul Sattar Patni, and Rs. 50,000 on Mehmood Gulam Hussain Patni.

5. Right to Redeem Confiscated Goods:
The appellants contended that the consignment should be returned or, at the very least, they should be allowed to redeem the goods on payment of redemption fine. The Tribunal was divided on this issue. One member agreed with the confiscation and penalties but opined that the goods should be allowed to be redeemed on payment of fine, referencing the Tribunal's decision in Gauri Enterprises v. Commissioner of Customs, Pune. The other member upheld the absolute confiscation, emphasizing the deliberate fraud and the larger implications of illegal activities related to Sandalwood Oil.

Final Judgment:
The matter was referred to a third member due to the difference of opinion. The third member concurred with the view that the appellants should be given an option to redeem the goods on payment of fine. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner for fixing the quantum of redemption fine. The appeal was disposed of in this manner, allowing the appellants to redeem the confiscated goods on payment of an appropriate fine.