2008 (3) TMI 549 - AT - Customs

Redemption fine and penalty - Quantum of Penalty - Composite penalty - Held that - It is obvious from the facts of the case that the description, quantity and value of the goods were misdeclared by the exporter and, therefore, the confiscation of the goods under Section 113(d) and (i) of the Customs Act is unassailable. The value of the goods has been determined after the requisite market enquiries. The appellant has not shown enough grounds to disturb this valuation. However, they seem to have an irresistible case against the quantum of redemption fine determined by the Commissioner as also against the quantum of penalty imposed by him - appeal allowed by way of remand.

Summary

Issues:
1. Misdeclaration of goods and overvaluation for duty drawback claim.
2. Seizure of goods, show-cause notice, and imposition of penalty.
3. Adjudication by the Commissioner regarding the value of goods, confiscation, and penalty.
4. Appeal against the valuation, redemption fine, and penalty imposed.

Issue 1: Misdeclaration of goods and overvaluation for duty drawback claim:
The appellants filed shipping bills claiming duty drawback for cotton garments exported to the UK. However, upon examination, the consignment was found to contain different items than declared, of inferior quality and lower value. Authorities suspected misdeclaration and overvaluation to obtain undue benefits. A show-cause notice was issued proposing to fix the value at Rs. 9.93 lakhs instead of the declared Rs. 70.56 lakhs.

Issue 2: Seizure of goods, show-cause notice, and imposition of penalty:
The goods were seized under mahazar, and investigations revealed misdeclaration and overvaluation. The Commissioner ordered confiscation of goods valued at Rs. 9.93 lakhs, with an option for redemption on payment of a fine. A penalty of Rs. 4 lakhs was imposed on the exporter under relevant sections of the Customs Act for contravention.

Issue 3: Adjudication by the Commissioner regarding the value of goods, confiscation, and penalty:
The Commissioner rejected the declared value, confirmed the market value at Rs. 9.93 lakhs, and ordered confiscation under specific sections of the Customs Act. A redemption fine equal to the value of goods and a penalty of Rs. 4 lakhs were imposed. The appellate tribunal found no case against the valuation and confiscation but noted issues with the quantum of redemption fine and penalty.

Issue 4: Appeal against the valuation, redemption fine, and penalty imposed:
The tribunal allowed the appeal by remanding the case, setting aside the fine and penalty imposed by the Commissioner. It highlighted flaws in determining the redemption fine and penalty under different clauses of the Customs Act, directing a fresh determination in accordance with the law after providing a reasonable opportunity for the party to be heard.

This detailed analysis covers the misdeclaration of goods, confiscation, and penalties imposed, as well as the appellate tribunal's decision to remand the case for a fresh determination of the fine and penalty.