2011 (3) TMI 1205 - AT - Customs

EPCG licence - misdeclaration of value of the capital goods - lower value than what was shown in the proper invoice of the supplier was entered by the importer in the Bill of Entry, which resulted in payment of duty at concessional rate on the declared value - Held that - Wrong declaration of value of the imported goods would mean misdeclaration and the same would attract confiscation of the goods under Section 111(m) of the Act, importer, by misdeclaring the value of the goods in the Bill of Entry, rendered themselves liable to be penalized under Section 112 of the Customs Act. Whether they had any intention to evade payment of duty or not is immaterial as it is settled law that no mens rea is required for penalty under Section 112, quanta of fine reduced and penalty - reduce the quanta of fine and penalty to Rs.5 lakhs and Rs.1 lakh respectively. The importer shall pay these amounts at the earliest, whereupon the relevant Bank Guarantee shall be returned to them. CHA - CHA did not obtain authorization from the importer - CHA abetted the offence committed by the importer - Held that - As regards the first charge, it was, at best, a ground for action against the CHA under the Customs House Agents Licensing Regulations, 2004 rather than under Section 112 of the Customs Act. With regard to the second charge, no question of holding the CHA liable to be penalized inasmuch as they cannot be held to have been abetted any offence of the importer, penalty on the CHA stands vacated

Summary

Issues:
1. Misdeclaration of value of imported goods under EPCG Scheme.
2. Confiscation of goods under Sections 111(m) & (o) of the Customs Act.
3. Imposition of penalties under Section 112 of the Customs Act.
4. Appeal against the Commissioner's order.

Detailed Analysis:
1. The case involved the importer misdeclaring the value of imported capital goods under the EPCG Scheme, leading to the payment of duty at a concessional rate. The importer admitted to the mistake, rectified it promptly, and provided additional security to secure the revenue. The Tribunal found that there was no mens rea or deliberate intent to evade duty, as the correct value was submitted to the DGFT for the EPCG license. The Tribunal concluded that the importer should not be denied the benefit of the EPCG scheme due to inadvertent errors in declaration.

2. The Commissioner had ordered the confiscation of goods under Sections 111(m) & (o) of the Customs Act, along with imposing a redemption fine. The Tribunal noted that only misdeclaration of value, not a breach of the Customs Notification, was alleged. As a result, the invocation of Section 111(o) for confiscation was deemed improper. The Tribunal reduced the quantum of the fine considering the circumstances and clarified that wrong declaration of value attracts confiscation under Section 111(m) but not under Section 111(o).

3. Penalties were imposed under Section 112 of the Customs Act on the importer and the Customs House Agent (CHA). The Tribunal acknowledged that no mens rea is required for penalty under Section 112. However, it observed that the penalties needed to be reduced based on the transparent conduct of the importer and the inadvertent nature of the mistake. The Tribunal vacated the penalty imposed on the CHA, stating that the charges against them were not sustainable.

4. In the final decision, the Tribunal reduced the fines and penalties imposed on the importer, directing them to pay revised amounts promptly. The Tribunal allowed one appeal and disposed of another, emphasizing the inadvertent nature of the error and the lack of deliberate intent to evade duty. The judgment highlighted the importance of transparency in import transactions and the need to differentiate between inadvertent mistakes and deliberate misconduct.