2007 (6) TMI 23 - AT - Customs

Confiscation, fine and penalty Department contended that appellant good is of prime instead of near prime and also file lower price for the imported good and accordingly fine and penalty imposed on him Allow the appeal partly

Summary

Issues:
1. Alleged issuance of anti-dated invoices by the exporter.
2. Confiscation of consignments and penalties imposed under the Customs Act.
3. Involvement of Clearing House Agent (CHA) firm and its partner in the case.

Issue 1: Alleged issuance of anti-dated invoices by the exporter

The case involved an exporter based in Hong Kong, M/s. Success Engineering, who exported HDPE consignments to India. The exporter initially provided invoices at the rate of US $600/MT, but investigations revealed that they had originally issued invoices at a higher rate of US $600/MT CIF for realization through the bank. The consignments were not cleared by the importers due to discrepancies in quality classification. The Tribunal found the explanation for issuing anti-dated invoices at a lower rate unconvincing, stating that no reliable correspondence supporting a price revision was presented. The Tribunal held that the exporter's actions were not bona fide, as the quality of the goods did not match the declared classification. Consequently, the Commissioner's decision to confiscate the goods and impose penalties on M/s. Success Engineering was upheld, although the redemption fine and penalty amounts were reduced to Rs. 7 lakhs and Rs. 2 lakhs, respectively.

Issue 2: Confiscation of consignments and penalties imposed under the Customs Act

The consignments in question were confiscated due to discrepancies in quality classification and the issuance of anti-dated invoices by the exporter. The Tribunal determined that the goods were not as per the declared quality, leading to the imposition of penalties under Section 112 of the Customs Act, 1962. While the confiscation and penalties were upheld for M/s. Success Engineering, the Tribunal considered the circumstances of the case and reduced the redemption fine from Rs. 20 lakhs to Rs. 7 lakhs and the penalty from Rs. 5 lakhs to Rs. 2 lakhs. This decision was based on the fact that the consignments had already been re-shipped to Hong Kong after payment of the reduced fines.

Issue 3: Involvement of Clearing House Agent (CHA) firm and its partner in the case

The other appellants in the case were a CHA firm and the partner of the firm involved in filing documents for the clearance of the consignments. The Tribunal found no evidence indicating their knowledge or intention to declare a lower price to gain wrongful benefits. As a result, the Tribunal concluded that there was no proof of their involvement in violating customs laws. The appeals by the CHA firm and its partner were fully allowed, as there was no evidence to support penal action against them under Section 112 of the Customs Act.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Ahmedabad addressed issues related to the alleged issuance of anti-dated invoices, confiscation of consignments, and penalties imposed under the Customs Act. While penalties were upheld for the exporter, M/s. Success Engineering, they were reduced considering the circumstances of the case. The involvement of the CHA firm and its partner did not show any intention to violate customs laws, leading to the full allowance of their appeals.