2011 (2) TMI 892 - AT - Customs

Mis-declared goods with intention to take excess draw back claim - confiscated with an option - Reduction in redemption fine - the shipping bills were filed by the assessee in August, 2010 and the goods are lying at port the assessee has incurred heavy detention and demurrage charges. Moreover, season is over as these garments were to be used during festive season of Id. We find that redemption fine is at higher side, therefore, exercising our discretionary power we reduce the redemption fine to Rs. 10,00,000/- (Rupees ten lacs only). Enhancement of penalty - found that in such a case the adjudicating authority has imposed a penalty of Rs. 20,000/- only which is at lower side - Considering the nature of offence committed by the assessee and the malafides, we enhance the penalty to Rs. 5 lakhs.

Summary

Issues: Mis-declaration of goods for excess drawback claim, Confiscation of goods, Redemption fine, Penalty under Customs Act

Mis-declaration of Goods for Excess Drawback Claim:
The case involved an appeal by both the Assessee and the Revenue against an impugned order regarding the mis-declaration of goods. The Assessee filed a shipping bill for export, declaring the item as 100% Polyster Ladies Blouse to South Africa. However, upon examination, it was revealed that the goods were actually 100% Polyster Ladies hijab and not as declared. This mis-declaration was done with the intention to claim excess drawback. The value of the goods exceeded Rs. 2 crores, with an intended excess drawback claim of around Rs. 23 lakhs. Consequently, the goods were confiscated with an option for redemption on payment of a fine of Rs. 20 lakhs under Section 125.

Confiscation of Goods and Redemption Fine:
Upon hearing both sides, the Tribunal noted that the Assessee had incurred heavy detention and demurrage charges due to the goods lying at the port since August 2010. Additionally, as the festive season for which the garments were intended had passed, the Tribunal considered the redemption fine to be on the higher side. Therefore, using discretionary powers, the redemption fine was reduced to Rs. 10,00,000. This decision aimed to address the Assessee's financial burden due to the prolonged detention of the goods and the missed seasonal opportunity.

Penalty Imposed under Customs Act:
The Tribunal also deliberated on the penalty imposed by the Adjudicating Authority under Section 114 of the Customs Act, 1962. While the Authority had set the penalty at Rs. 20,000, the Tribunal found it to be inadequate given the nature of the offense and the malafides involved in the mis-declaration. Consequently, the penalty was enhanced to Rs. 5 lakhs to reflect the seriousness of the offense committed by the Assessee. This decision aimed to deter future misconduct and uphold the integrity of customs regulations.

Conclusion:
In conclusion, the Tribunal disposed of both appeals by reducing the redemption fine to Rs. 10,00,000 and enhancing the penalty to Rs. 5 lakhs. These decisions were made after careful consideration of the circumstances, including the financial impact on the Assessee and the need to uphold the regulatory framework governing customs declarations and claims.