2010 (7) TMI 590 - AT - Customs

Redemption fine and penalty - Confiscation - Misdeclaration of goods - The Bill of Entry has been filed on the basis of the invoice and packing list which clearly mentioned that there are 19 packets in the box and it is only physical examination it was found 18 packets which was not in the knowledge of the importer or the CHA. Moreover, this fact has been confirmed by the supplier - it is a mistake of the supplier, while packing the goods wherein they did not send the goods as per the quantity and value mentioned in the invoice - confiscation and penalty not warranted - decided in the favour of the assessee

Summary

Issues:
Appeal against imposition of redemption fine and penalty on imported diamonds due to misdeclaration in the Bill of Entry.

Analysis:
1. Misdeclaration in Bill of Entry:
The appellant imported a consignment of cut and polished diamonds with discrepancies in weight and quantity. The Bill of Entry declared 19 packets, but only 18 were found during examination, with one packet short in weight. The customs officials imposed a redemption fine and penalty under Section 112(a) of the Customs Act, 1962.

2. Appellant's Argument:
The appellant's consultant argued that the misdeclaration was unintentional, as the supplier mistakenly left out one packet mentioned in the invoice. Citing precedents like Commissioner of Customs v. Veer Gems and Northern Plastic Ltd. v. Commissioner of Customs, the consultant contended that there was no dishonest intention to evade duty, as the appellant provided correct details in the Bill of Entry.

3. Revenue's Argument:
The Revenue contended that misdeclaration led to confiscation under Section 111, supported by cases like Pine Chemical Suppliers v. Collector of Customs and Afzal Agency v. CESTAT, emphasizing that mens rea is not necessary for invoking confiscation powers.

4. Judgment:
After considering both sides, the tribunal found it to be a case of misdeclaration in the Bill of Entry. However, since the misdeclaration was due to the supplier's error and not the appellant's knowledge, confiscation and penalty were not warranted. The tribunal distinguished cases cited by the Revenue, as they dealt with duty enhancement and undervaluation, not applicable to this situation.

5. Conclusion:
The tribunal allowed the appeal, ruling in favor of the appellant due to the supplier's mistake, leading to the misdeclaration. As the diamonds were duty-free and the error was not intentional, no confiscation or penalty was justified. The judgment was pronounced on 19-7-2010.