2014 (12) TMI 1078 - HC - Customs

Imposition of fine and penalty - Valuation of goods - Whether the Hon ble Tribunal is justified in holding that the misdeclared value of the goods cannot be reduced to the actual market value of the goods attempted to be exported specially when the Act and the rules do not whisper so. - Imposition of redemption fine and penalty - Held that - On a plain reading of the language of the substantive part of sub-section (1) of Section 125, it is clear that the legislature has not imposed a restriction of the kind which has been sought to be implied on behalf of the appellant. What the proviso to sub-section (1), however, stipulates is a ceiling on the fine in lieu of confiscation, insofar as it stipulates that such fine shall not exceed the market price of the goods confiscated. Now, it is in the background of the provisions of Section 125 that the legality of the order would have to be assessed. Quantum of fine is concerned) so long as the quantum of redemption fine was not in excess of the stipulation contained in the proviso to sub-section (1) to Section 125. In fact, before the Tribunal, it was sought to be urged, as recorded in the impugned order, that the value declared in respect of the mis-declared goods must be reduced to the extent of the value of the actual goods in the consignment. The Tribunal was justified in holding that no such exercise could be carried out and the Court has no jurisdiction to do so, so as to legalize a patent illegality. The case of the appellant was that the goods were mis-declared as a result of a mistake of its labourers. That is besides the point, because the fact does remain that, in his declaration of the goods which were meant for export, the appellant had mis-declared the goods. A case for confiscation of the goods was, therefore, clearly made out. The order of the Tribunal, on a considered view of the matter, reducing the redemption fine and the penalty to the extent indicated in the order, is fair and does not call for interference in the appeal by the exporter. - No substantial question of law arises - Decided against assesse.

Summary

Issues:
1. Imposition of redemption fine and penalty by the Tribunal.
2. Reduction of mis-declared value to actual market value of goods.
3. Justification of imposing redemption fine and penalty despite laborers' mistake.

Analysis:

Issue 1: Imposition of Redemption Fine and Penalty
The appellant contested the order passed by the Customs, Excise & Service Tax Appellate Tribunal imposing a redemption fine of Rs. 10 lakhs and a penalty of Rs. 5 lakhs. The Tribunal reduced the redemption fine from Rs. 15 lakhs to Rs. 10 lakhs and the penalty from Rs. 8 lakhs to Rs. 5 lakhs. The appellant argued that the redemption fine should have been based on the actual value of the mis-declared goods, not the declared value. However, the court found that the redemption fine was within the limits specified under Section 125 of the Customs Act, 1962. The court upheld the Tribunal's decision on the imposition of the redemption fine and penalty, considering the nature of the offense.

Issue 2: Reduction of Mis-declared Value
The appellant contended that the mis-declared value of the goods should be reduced to the actual market value. The Tribunal dismissed this argument, stating that no court has the power to legalize an illegality by adjusting the mis-declared value. The court agreed with the Tribunal's decision, emphasizing that the redemption fine should not exceed the market price of the confiscated goods. The court clarified that the redemption fine was appropriately calculated based on the provisions of Section 125 of the Customs Act, 1962.

Issue 3: Justification of Imposing Fine Despite Laborers' Mistake
The appellant claimed that the mis-declaration of goods was due to a mistake by laborers and that the consignment was left untouched in the factory. However, the court held that regardless of the reason for mis-declaration, the appellant was responsible for the inaccurate declaration of goods intended for export. The court affirmed that the Tribunal's decision to reduce the redemption fine and penalty was fair and justified, considering the circumstances of the case. The court dismissed the appeal as it did not raise any substantial question of law and ordered no costs to be paid.

In conclusion, the court upheld the Tribunal's decision on the imposition of the redemption fine and penalty, emphasizing compliance with the provisions of the Customs Act, 1962. The court found no grounds to interfere with the Tribunal's order, as it was deemed fair and reasonable in light of the appellant's mis-declaration of goods for export.