2015 (10) TMI 761 - HC - Customs

Mis-declaration of country of origin - levy of penalty where no duty is payable - Re-import - Export goods were rejected by the foreign buyer - after examining the goods, the department came to the conclusion that the goods covered by the bill of entry were the same as those exported under the four shipping bills. - Held That - exemption in terms of Notification No.94/96-Cus - No dispute arise about the fact that goods in question were not dutiable goods, by virtue of the exemption notification - since no duty is payable, no penalty can be imposed Tribunal followed the express language of Section 112(a)(ii) - Found no merits in the appeal hence dismissed Decision as made in case of Associated Cement Companies Ltd., v. Commissioner of Customs 2001 (1) TMI 248 - Supreme Court of India Decided against the Appellant.

Summary

Issues:
1. Confiscation of goods under Section 124 of the Customs Act, 1962.
2. Claim of exemption under Notification No.94/96-Cus.
3. Imposition of penalty under Section 112(a)(ii) of the Customs Act, 1962.

Confiscation of Goods under Section 124:
The case involved the export of finished leather by the first respondent under four shipping bills, out of which three bills realized sale proceeds in foreign exchange. However, the goods under the fourth bill were rejected by the foreign buyer. Subsequently, a bill of entry was filed with a misdeclaration as to the country of origin. The Customs department concluded that the goods in the bill of entry matched those exported under the shipping bills, leading to confiscation proceedings initiated under Section 124 of the Customs Act, 1962.

Claim of Exemption under Notification No.94/96-Cus:
The first respondent contested the confiscation proposal and claimed exemption under Serial No.3 of the Table annexed to Notification No.94/96-Cus. Despite the claim, the Commissioner rejected it and ordered confiscation with an option for redemption upon payment of a fine. Additionally, a penalty was imposed along with a directive to produce Duty Entitlement Pass Book (DEPB) for debiting a specific amount. The Commissioner's decision was challenged, and the case reached the CESTAT, where the penalty was set aside.

Imposition of Penalty under Section 112(a)(ii):
The Commissioner imposed a penalty under Section 112(a)(ii) of the Customs Act, 1962, for the act leading to goods becoming liable to confiscation under Section 111. However, the Tribunal, in line with the Supreme Court's decision in Associated Cement Companies Ltd. v. Commissioner of Customs, held that the penalty is leviable only for dutiable goods and not for prohibited goods. As the goods in question were non-dutiable due to an exemption notification, the Tribunal dismissed the appeal, citing the interpretation of Section 112(a)(ii) by the Supreme Court. Consequently, the appeal was dismissed, and the questions of law were answered against the appellant.

In conclusion, the judgment addressed the issues of confiscation of goods under Section 124, the claim of exemption under Notification No.94/96-Cus, and the imposition of penalty under Section 112(a)(ii) of the Customs Act, 1962. The decision highlighted the specific circumstances of the case, the legal provisions invoked, and the interpretations made by the Tribunal based on relevant precedents.