2014 (7) TMI 19 - AT - Customs

Confiscation of goods - Redemption fine and penalty - Mis declaration of goods - Whether there was misdeclaration of goods admitted to be exported - Declaration of Non basmati rice as basmati rice - Held that - Attempt to export non-basmati rice came to record, when the preliminary examination was conducted, that was corroborated by the testing laboratory report dated 12.02.2009. 6 days there after when the appellant would apprehend that the proceeding shall be initiated under section 111 and 114 of Customs Act 1962, it sent a letter to the Commissioner pleading ignorance and finding fault with the workers. Such plea does not have basis, since the appellant did not come out with clean hands to inform the authority before 12.02.2009. That proved misdecaration of the description of goods. Once such misdeclaration is established section 113 shall apply for confiscation of the goods. The authority accordingly, granted redemption option to the appellant. But the said authority has not recorded the value of the non-basmati rice attempted to be exported for determination of redemption fine and penalty. Therefore, we ascertain from the appellant as to the value of the said goods. It is explained that the value shall be Rs.1,50,16,320/-. Considering 10% profit margin, the redemption fine is reduced to Rs.15.00 Lakhs. So far as the penalty of Rs.20.00 Lakhs under section 114 (i) is concerned, invoking of the said section is proper. That rules out applicability of section 114 AA of Customs Act 1962. It may be stated that the appellant took a risk in attempting to export non-basmati rice and there shall be no sympathy for any reduction in penalty. However, considering that the appellant has admitted the misdeclaration, to reduce the litigation, the penalty is reduced to Rs.15.00 Lakhs - Decided partly in favour of assessee.

Summary

Issues: Misdeclaration of goods admitted to be exported.

Analysis:
1. The main issue in this appeal was whether there was a misdeclaration of goods admitted to be exported. Non-basmati rice was admitted to be exported, but customs detected that the goods were mis-declared as Basmati rice during a preliminary examination. Subsequent testing confirmed the misdeclaration.

2. The appellant argued that the misdeclaration was a mistake, as non-basmati rice packets were loaded instead of basmati rice. The appellant notified the authorities upon discovering the error, claiming there was no deliberate intention to misdeclare the goods. Therefore, the appellant contended that penalties and fines should not be imposed.

3. The appellant further contended that any penalty should be examined under section 114AA of the Customs Act 1962, which requires mens rea for penal provisions. The appellant argued that without mens rea, no penalty should be levied.

4. The Revenue supported the adjudication, stating that the appellant only explained the error after detection during the preliminary examination. The authorities passed orders when the appellant waived service of the show cause notice.

5. The Tribunal noted that the misdeclaration was established through examination and testing, and the appellant's plea of ignorance and blaming workers was unfounded. Section 113 applied for the confiscation of goods due to misdeclaration. The value of the goods was determined, and the redemption fine was reduced to Rs. 15.00 Lakhs based on the value provided by the appellant.

6. Regarding the penalty of Rs. 20.00 Lakhs under section 114(i), the Tribunal found it appropriate to invoke this section, ruling out the applicability of section 114AA. Despite the risk taken by the appellant in attempting to export non-basmati rice, a concession was made to reduce the penalty to Rs. 15.00 Lakhs due to the appellant's admission of misdeclaration. The appeal was partly allowed based on the concessions made.