2013 (8) TMI 394 - AT - Customs

Confiscation of goods excessive penalty imposed department confiscated the goods and allowed its redemption on payment of a fine and penalty held that - Penalty imposed by Commissioner (Appeals) was excessive court did not agree with the arguments that the penalty to be imposed u/s 114 had to be equal to the duty sought to be evaded court followed the judgement of COMMR. OF CUSTOMSTuticorin Vs Sai Copiers 2008 (1) TMI 402 - HIGH COURT OF JUDICATURE AT MADRAS court reduced the penalty decided partly in favour of assessee

Summary

Issues: Misdeclaration of goods for export, imposition of penalty under Section 114 of Customs Act, interpretation of penalty amount, discretion of adjudicating officers in penalty imposition.

Misdeclaration of Goods for Export:
The appellant exported goods declared as "Bufflight Burnish Upper Finished Leather" under claim for drawback. Customs officers found that 4803 sq. feet of the goods did not match the description declared in the shipping bill. The Central Leather Research Laboratory confirmed the mismatch, leading to the confiscation of the goods valued at Rs.2,62,041/- and imposition of a penalty under Section 114 of the Customs Act, 1962. The appellant argued that the goods were indeed finished leather, albeit not fitting the exact type declared, and thus, there was no intention to evade export duty.

Imposition of Penalty under Section 114:
The adjudicating authority initially imposed a penalty of Rs.5,000/-, which the appellant paid along with the redemption fine. However, the Revenue appealed to the Commissioner (Appeals) seeking a higher penalty equal to the duty amount sought to be evaded. The Commissioner (Appeals) upheld the appeal and imposed a penalty of Rs.1,58,413/-. The appellant contended that Section 114 allows for discretion in penalty imposition based on the gravity of the offense, citing a precedent and arguing that the penalty amount was excessive.

Interpretation of Penalty Amount and Discretion of Adjudicating Officers:
The appellant argued that the Commissioner (Appeals) erred in interpreting Section 114 by not considering the discretion vested in adjudicating officers for penalty imposition. The appellant highlighted a previous case where the department sought a penalty of 5% of the goods' value, indicating that the imposed penalty was beyond the department's initial prayer. The Revenue, on the other hand, maintained that the penalty was low given the duty evasion amount. The Tribunal, after considering both arguments, reduced the penalty amount to Rs.9,000/-, emphasizing that the penalty imposed initially was low, while the Commissioner (Appeals) had set an excessive penalty. The appellant was directed to pay the differential amount of Rs.4,000/-, and the appeal was allowed partially.