2010 (2) TMI 634 - AT - Customs

Confiscation and penalty Misdeclaration - against 16, 000 pieces declared in the Shipping Bill there were 16415 pieces sought to be exported - These included 6531 pieces of damaged garments not fit for use Held that - excess of 415 pieces of garments we do not find any misdeclaration in the Shipping Bill - mis-match does not justify any penalty on the exporter - Commissioner ordered penalty holding that mens rea was not necessary to impose penalty Export realized as per purchase order Description cannot be considered as wrong confiscation set aside Penalty not imposable

Summary

Issues:
1. Misdeclaration of quality, quantity, and value of exported goods for obtaining higher drawback.
2. Confiscation and penalty imposed under Customs Act, 1962.
3. Appeal against the impugned order.

Analysis:

Issue 1: Misdeclaration of quality, quantity, and value
The appellant declared 16,000 pieces of "100% cotton denim garments" for export but was found to be exporting 16,415 pieces, including 6,531 damaged garments. The authorities suspected misdeclaration to obtain higher drawback. The appellant argued that the buyer had consented to purchase the stock lot, as evidenced by email correspondence, and the value declared matched the purchase order. They claimed no mala fide intention and disputed the Commissioner's findings regarding the damaged pieces and misdeclaration. The Tribunal found discrepancies but concluded that the appellant did not willfully misdeclare the goods, vacating the confiscation order.

Issue 2: Confiscation and penalty under Customs Act
The Commissioner imposed penalties under various sections of the Customs Act, justifying it based on civil obligations and contravention of rules. The appellant challenged the penalties, citing legal precedents and arguing that no mens rea was present. The Tribunal analyzed the evidence and arguments, finding that the penalties were unjustified as there was no dishonest or contumacious conduct by the appellant. They disagreed with the Commissioner's reasoning and vacated both the confiscation and penalties imposed.

Issue 3: Appeal against the impugned order
The Tribunal thoroughly reviewed the case records, submissions, and legal arguments from both sides. They noted the discrepancies in the export declaration but ultimately concluded that the misdeclarations were not intentional. The Tribunal disagreed with the Commissioner's assessment of penalties and confiscation, citing legal precedents and lack of evidence of willful misconduct. Consequently, the Tribunal allowed the appeal, vacating the order of confiscation and penalties.

In conclusion, the Tribunal's detailed analysis focused on the misdeclarations in the export documents, the justification for penalties under the Customs Act, and the overall lack of evidence supporting willful misconduct by the appellant. The decision to vacate the penalties and confiscation was based on the absence of dishonest conduct and the mismatch between the Commissioner's findings and the legal standards applied in similar cases.