2014 (11) TMI 611 - AT - Customs

Confiscation of goods u/s 113 (d) - Redemption fine and penalty - Mis declaration of goods - Held that - In the guise of Basmati rice, attempt was made to export non Basmati rice adopting questionable modus operandi. Actually 13 containers were attempted to be cleared. Containers were stuffed in such way that front row contained Basmati rice and second row contained non-Basmati rice. Findings of the Commissioner relating to confiscation of the goods and imposition of redemption fine of ₹ 32.50 lakhs. In the facts and circumstance is justified when questionable modus operandi remained un-explained. Intentional misdeclaration does not deserve leniency. Therefore redemption fine imposed in adjudication remains un-intouched. Conduct of appellants show that they were consciously involved in the export of non basmati rice following dubious method to defraud the revenue. Therefore imposition of penalty on the exporter does not call for interference for which entire penalty is confirmed - Decided against assessee.

Summary

Issues: Attempted export of non-Basmati rice as Basmati rice, Confiscation of goods, Imposition of redemption fine, Imposition of penalties

Issue 1: Attempted export of non-Basmati rice as Basmati rice

The case involved the attempted export of non-Basmati rice disguised as Basmati rice in 13 containers by M/s Vaibhav Overseas. The non-Basmati rice did not meet the specifications outlined in the DGFT Notification, which prohibited the export of non-Basmati rice. Representative samples were tested and found to be non-Basmati rice, confirming the intentional misdeclaration of goods. The containers were strategically stuffed to camouflage the inferior quality rice, with the front row containing Basmati rice and the second row non-Basmati rice, indicating a deliberate attempt to deceive. The misdeclaration was further supported by the intentional mixing of consignments to smuggle non-Basmati rice. The court upheld the findings of misdeclaration and prohibited export, dismissing the defense plea of accidental mixing.

Issue 2: Confiscation of goods and imposition of redemption fine

The Commissioner confiscated the non-Basmati rice and imposed a redemption fine of Rs. 32.50 lakhs on M/s Vaibhav Overseas. The court justified the confiscation and redemption fine, considering the deliberate modus operandi employed to deceive authorities and the intentional misdeclaration of goods. The court found that the questionable methods used in the attempted export warranted the redemption fine, as the intention to defraud was evident from the misrepresentation of the exported goods.

Issue 3: Imposition of penalties

A penalty of Rs. 9,10,000 was imposed on M/s Vaibhav Overseas and a penalty of Rs. 2.60 lakhs on Shri Gyan Chand, partner of M/s Vaibhav Overseas. The court upheld the penalties, stating that the conduct of the appellants demonstrated their conscious involvement in exporting non-Basmati rice with the intention to defraud the revenue. Shri Gyan Chand's active participation in the operation to export prohibited rice was evident, as he was aware of the misdeclaration and attempted to conceal the non-Basmati rice. The court affirmed the penalties imposed on both parties, highlighting their deliberate actions to deceive authorities and evade detection.

In conclusion, the court dismissed both appeals, emphasizing the deliberate misdeclaration and attempted export of non-Basmati rice as Basmati rice. The judgment upheld the confiscation of goods, imposition of redemption fine, and penalties, highlighting the conscious involvement of the appellants in defrauding the revenue through deceptive practices.