2014 (12) TMI 360 - HC - Customs

Evasion of custom duty - import of Tin Sheets in the name of Tin Free Sheets - Misdeclartion of goods - Suppression of value of goods - Confiscation of goods - Penalty u/s 112 - Held that - Here is a case where the importer attempts to import goods one after the other and the investigation revealed that there is a clear intent to evade payment of duty. The importer realizing that he would suffer not only the consequences of confiscation, but penalty, has chosen not to file bill of entry for subsequent consignments and has proceeded to abandon the goods. From a reading of the statement recorded at the time of investigation, it is evident that the import was made with an intention to evade duty by clearing Tin Sheets of higher value by declaring them as Tin Free Sheets of lower value. There is also a clear admission that differential price was paid through other than banking channels. There is a clear admission that only on investigation, the importer tried to cover up the imports by seeking amendment to import documents. There is not only an admission regarding misdeclaration of goods, but the investigation reveals that the goods are attempted to be imported contrary to EXIM Policy 2002-2007. Accordingly, on the ground of misdeclaration and improper import contrary to the EXIM Policy, there has been a violation of the Customs Law and, in our considered opinion, show cause notice issued invoking Section 111(d) and 111(f) of the Act is proper. Inasmuch as dutiable goods required to be mentioned under the Import General Manifest have not been mentioned as Tin Sheets and in the shipping documents it has been wrongly stated as Tin Free Sheets, the contention of the department that there was case for confiscation of improperly imported goods is justified. We find that the provisions of Section 111(d) and 111(f) of the Act have been clearly breached by the importer, inasmuch as there has been an attempt to import goods contrary to the prohibition imposed by or under the Act or other law for the time being in force. Since the goods are attempted to be improperly imported and that has been admitted by the importer, the consequence by way of penalty would follow. The Tribunal fell into error by stating that merely because the goods have been abandoned and bill of entry has not been filed, it is not a case for imposition of penalty. The right of a person to abandon the goods and seek exemption from payment of duty is under Section 23(2) of the Act, but that does not absolve him of his liability to be proceeded against under the provisions of the Act for any violation which renders the goods improperly imported liable for confiscation. The penalty under Section 112(a) of the Act is in relation to such conduct of improper importation of goods. Plea of the importer that he is not the owner of the goods also appears to be a fallacy. If he is not the owner, as stated by him, there is no question of seeking abandonment under Section 23(2) of the Act, where a right is given to the owner to abandon the goods. At the first instance, as an importer, the first respondent chooses to abandon the goods as owner and thereafter pleads that he is not the owner. In the statement recorded by the Customs authority, he has accepted that he is the owner of the goods and the reason for misdeclaration has also been stated. The statement is not retracted. The complicity of the importer in the improper import is, therefore, evident from the narration of facts as above. - Section 112 of the Act stands clearly attracted to the case of improper importation of goods by any person. The key words of Section 112(a) of the Act are that in relation to any goods, if any person does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 of the Act, he shall be liable to pay penalty. In this case, the importer did not make a proper declaration in respect of the goods with an intent to evade payment of customs duty and, therefore, the consequence of penalty will flow automatically. In our firm view, the Commissioner was justified in imposing penalty, though we find it is meager in the facts of the present case. - Decided in favour of Revenue.

Summary

Issues Involved:
1. Misdeclaration of imported goods.
2. Seizure and examination of goods.
3. Issuance of Show Cause Notice.
4. Importer's response and plea.
5. Authority of Directorate of Revenue Intelligence.
6. Findings of the Commissioner of Customs.
7. Tribunal's decision on penalty.
8. Appeal by the Department.
9. Legal provisions under the Customs Act.
10. Penalty for improper importation.

Detailed Analysis:

1. Misdeclaration of Imported Goods:
The importer declared the consignment as secondary/defective Tin Free Sheets (TFS) but the actual goods were Tin Sheets (TS). This misdeclaration was discovered by the Directorate of Revenue Intelligence (DRI) during a search and seizure operation.

2. Seizure and Examination of Goods:
The DRI seized coils/sheets weighing 68.4 MTs and examined the live consignment, confirming it contained Tin Sheets, not Tin Free Sheets. Further investigation revealed additional consignments misdeclared as TFS, leading to their detention.

3. Issuance of Show Cause Notice:
Based on the findings, a Show Cause Notice was issued to the importer, proposing the goods be treated as Tin Sheets, fixing their value at Rs. 31,10,931/- CIF, and suggesting confiscation and penalty under Sections 111(d), 111(f), and 112(a) of the Customs Act, 1962.

4. Importer's Response and Plea:
The importer replied, claiming financial constraints led to the abandonment of the goods and argued that since no bill of entry was filed, confiscation or penalty should not apply. They also contested the authority of the DRI to issue the notice under Section 28 of the Customs Act.

5. Authority of Directorate of Revenue Intelligence:
The Commissioner of Customs clarified that the notice was issued under Section 124, not Section 28, and proceeded to evaluate the case on its merits.

6. Findings of the Commissioner of Customs:
The Commissioner found the importer had a history of importing Tin Sheets under the guise of TFS. The importer's failure to retract their statement and the evidence of misdeclaration confirmed the intent to evade customs duty. The Commissioner concluded that the goods were misdeclared to avoid higher duty and violated EXIM Policy 2002-2007, justifying confiscation and penalty.

7. Tribunal's Decision on Penalty:
The Tribunal, referencing the case of Commissioner of Customs, New Delhi v. Sewa Ram & Bros., ruled that since the importer did not file a bill of entry and abandoned the goods, no penalty under Sections 23(2) and 112 was applicable.

8. Appeal by the Department:
The Department appealed, questioning whether abandoning goods at the harbor exempts the importer from penalty under Sections 23(2) and 112 of the Customs Act.

9. Legal Provisions under the Customs Act:
Sections 23, 111(d), and 112 of the Customs Act were examined. Section 23(2) allows for the relinquishment of title to goods before clearance, exempting the owner from duty. Section 111(d) pertains to the confiscation of goods imported contrary to prohibitions, and Section 112 imposes penalties for actions leading to such confiscation.

10. Penalty for Improper Importation:
The Court found the importer's actions constituted a clear attempt to evade duty, justifying penalty imposition. The Tribunal's reliance on the abandonment of goods to negate penalty was deemed erroneous. The Court emphasized that abandonment does not absolve liability for improper importation under Section 112(a).

Conclusion:
The Court upheld the Commissioner's decision to impose a penalty, finding the importer's conduct in misdeclaring goods and attempting to evade duty warranted such action. The appeal by the Department was allowed, reinforcing the applicability of penalties for improper importation despite the abandonment of goods.