2015 (4) TMI 236 - HC - Customs

Confiscation of goods - Penalty u/s 112(a) - Misdeclaration of goods - Held that - There is sufficient evidence on record to show that there was a clear understanding between the supplier and the buyer to quote a lesser quantity in the bill of Lading and also to give an impression to the Department that the quantity actually imported was less. Therefore, the provisions of Sec.111(f) is clearly attracted. As regards Sec.111(i), whatever found excess is taken to be as concealed. Especially,w hen it is an LCL container, if the officers happen to be lax in supervision and the custodian also co-operates, it is possible to get away with misdeclaration, even though the chances are remote. Concealment does not necessarily mean that there should be a false bottom or it should be covered by something else. Importation of excess quantity over and above what is declared in the bill of Lading is also concealment and therefore, I hold that Sec.111(i) is also attracted in this case. Therefore, the goods under seizure are liable to confiscation under Sec.111(f) and 111(i) of the custom act, 1962. Tribunal erred in holding that since no Bill of Entry is filed to clear the subject import, there is no case of mis-declaration. The commissioner has not proceeded on the basis of Section 111(d) of the Customs Act. The Tribunal, however, misconstrued the appeal as one filed by the respondent in a case falling under section 111(d) which is not correct. It is a case of confiscation by invoking the provisions of Sections 111(f) and 111(i). Enormous material has been culled out by the Commissioner to justify invocation of Sections 111(f) and 111(i). The reasons given by the Commissioner on the basis of the admitted fact/statements and the documents established a case that the importers have, in fact, involved themselves in such an import which renders the goods liable for confiscation under sections 111(f) and 111(i) of the Customs Act. The Tribunal misdirected itself by holding that there is no question of mis-declaration as contemplated under Section 111(d), when the Commissioner has not proceeded with the matter in terms of Section 111(d) of the Customs Act. Hence, we have no hesitation to hold that the Tribunal order is erroneous. - Decided in favour of Revenue.

Summary

Issues Involved:
1. Validity of confiscation of imported goods under Sections 111(f) and 111(i) of the Customs Act, 1962.
2. Validity of the imposition of penalty under Section 112(a) of the Customs Act, 1962 on the importer.

Issue-wise Detailed Analysis:

1. Validity of Confiscation of Imported Goods:
The primary issue was whether the confiscation of imported goods under Sections 111(f) and 111(i) of the Customs Act, 1962 was valid. The facts revealed that the importer had deliberately misdeclared the quantity and weight of the goods in the Bill of Lading, intending to evade duty. The consignment declared as 75 rolls weighing 1530 kgs was found to contain 675 rolls weighing 6650 kgs. The importer admitted the misdeclaration in his statement. The Commissioner held that the misdeclaration was intentional and not a rectifiable error, leading to the confiscation of goods under Sections 111(f) and 111(i). The Tribunal set aside this order, stating that no Bill of Entry was filed, hence no misdeclaration occurred. However, the High Court found that the importer's conduct of not filing the Bill of Entry and not amending the import manifest for over two months indicated an intention to evade duty. The High Court held that the provisions of Sections 111(f) and 111(i) were attracted even without the filing of the Bill of Entry, as the importer falls within the definition under Section 2(26) of the Customs Act. Thus, the High Court concluded that the confiscation was justified.

2. Validity of Imposition of Penalty:
The second issue was whether the imposition of a penalty under Section 112(a) of the Customs Act, 1962 on the importer was valid. The Commissioner imposed a penalty of Rs. 10,00,000/- on the importer for the misdeclaration intended to evade duty. The Tribunal set aside the penalty, reasoning that since the goods were abandoned and no Bill of Entry was filed, the penalty was not warranted. The High Court disagreed, stating that the importer's actions of misdeclaration and evasion of duty attracted the provisions of Section 112(a). The High Court emphasized that the importer's failure to file the Bill of Entry and amend the import manifest, along with the admission of misdeclaration, justified the imposition of the penalty. The High Court held that the penalty under Section 112(a) is applicable for improper importation of goods, regardless of the filing of the Bill of Entry. Consequently, the High Court upheld the imposition of the penalty.

Conclusion:
The High Court reframed the questions of law and answered them in favor of the Revenue, setting aside the Tribunal's order and restoring the Adjudicating Authority's order. The High Court concluded that the confiscation of goods under Sections 111(f) and 111(i) and the imposition of a penalty under Section 112(a) were justified based on the importer's conduct and the evidence of intentional misdeclaration to evade duty.