2014 (1) TMI 967 - AT - Customs

Penalty u/s 114A - Mis declaration of goods - Overvaluation of goods - Confiscation of goods - Held that - goods were allowed to be taken back to town on payment of redemption fine - department failed to prove any of the ingredient of Section 114(iii) on the part of the appellant i.e. any act of omission or commission which render goods liable for confiscation or act of aiding or abetting with which undue benefit of drawback was sought to be taken - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalties on appellants under Section 114(iii) of the Customs Act, 1962 for alleged involvement in overvaluation of goods and aiding smuggling.
2. Failure of the department to prove the allegations against the appellants leading to penalties.

Analysis:
Issue 1:
The appellants filed an appeal against the Order-in-Original imposing penalties of Rs. 50,000 and Rs. 10,000 respectively under Section 114(iii) of the Customs Act, 1962. The case involved an exporter who filed a shipping bill for the export of leather shoes uppers, claiming a drawback. Upon examination, it was discovered that the goods were of inferior quality and overvalued. Penalties were imposed on the exporter and the appellants, who were involved in processing the shipping bill. The appellants argued that they had submitted all necessary documents and were not involved in aiding smuggling. The penalties were imposed on the grounds that they failed to notify the department about the exporter's incapacity to handle such a large export.

Issue 2:
The department alleged that the appellants did not exercise due care despite knowing the exporter's limitations. However, the Tribunal found that the department failed to provide evidence of the appellants' involvement in actions that would render the goods liable for confiscation or aiding in seeking undue drawbacks. The penalties were set aside as the department could not prove any act of omission or commission by the appellants as required under Section 114(iii) of the Customs Act, 1962. Consequently, the appeals were allowed, and the penalties imposed on the appellants were overturned.