2015 (10) TMI 2546 - AT - Customs

Imposition of penalty u/s 114(iii) of the Customs Act, 1962 - Mis-declaration of goods to avail Duty drawback - classification of exported goods - Jute Twine or Jute Yarn - product exported considered as Jute twine as per trade practice - whether penalty u/s 114 correctly imposed upon the appellant? - Held that - The opening para of the Order-in-Original dated 30.11.2011 conveys that some exporters were exporting Jute yarn in the fuise of Jute Yarn, which support the view of the appellant that there was a general practice in trade to consider the export goods as Jute Twine. If the visual examination only was sufficient to distinguish Jute Twine and Jute Yarn then even the Customs examination officer could have also detected the same. Department had to approach Institute of Technology, Kolkata to arrive at a conclusion that goods exported were in fact Jute Yarn. - appellant cannot be held responsible for deliberate mis-declaration to avail higher DBK and no penalty attracted upon the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty imposition under Section 114 of the Customs Act, 1962

Analysis:
1. Issue of Penalty Imposition: The appellant challenged the penalty of &8377; 1.00 Lakh imposed under Section 114(iii) of the Customs Act, 1962. The appellant contended that the exported goods were mistakenly declared as Jute Twine instead of Jute Yarn under Drawback Schedule Sr.No.560704A. Upon realization of the error, the appellant promptly repaid the Drawback received. The appellant argued that there was no deliberate intent to mislead, as the goods were considered Jute Twine as per trade practice. The Department's reliance on the Institute of Technology, Kolkata's opinion to classify the goods as Jute Yarn was noted.

2. Contentions of the Parties: The appellant's representative, Shri Sanjay Bhowmik, emphasized the trade practice aspect, asserting that the misclassification was unintentional and promptly rectified. On the other hand, Shri A. Kumar, representing the Revenue, highlighted the appellant's experience in exporting the goods and contended that the appellant should have been aware of the distinction between Jute Twine and Jute Yarn.

3. Judicial Analysis: The Tribunal, after hearing both parties and examining the case records, deliberated on whether the penalty under Section 114 was rightly imposed. It was observed that the appellant rectified the error upon identification and repaid the incentives received. The Tribunal acknowledged the trade practice aspect and noted that even the Customs examination officer could not distinguish between Jute Twine and Jute Yarn visually. The reliance on Institute of Technology, Kolkata's opinion by the Department further supported the appellant's claim of no deliberate misdeclaration for financial gain.

4. Decision: Considering the factual matrix and the absence of intentional misdeclaration by the appellant, the Tribunal allowed the appeal. The penalty imposed by the Adjudicating authority was set aside, providing consequential relief to the appellant. The Tribunal's decision was pronounced in open court, granting relief to the appellant based on the lack of deliberate intent to mislead and the trade practice context surrounding the classification of the exported goods.