2007 (8) TMI 151 - AT - Customs

Penalty Appellants contended that the allegation of willful misdeclaration not sustained on the ground that value declared by him is the value furnished by the supplier Held that appellant contention was correct and penalty u/s 112of C.A., 1962 set aside

Summary

Issues:
- Waiver of pre-deposit and stay of recovery of penalty
- Misdeclaration of imported goods and imposition of penalty
- Requirement of mens rea for imposing penalty under taxation laws

Analysis:
1. The application filed sought waiver of pre-deposit and stay of recovery of a penalty of Rs. 50,000 imposed on the appellants. The Tribunal, after hearing both sides, waived the pre-deposit requirement and proceeded with the appeal for disposal.

2. The case involved the import of mulberry raw silk of Chinese origin, declared as 4A grade but tested as 2A grade, attracting anti-dumping duty. A penalty of Rs. 50,000 was imposed under Section 112(a) of the Customs Act for misdeclaration of goods, confirmed by the Commissioner (Appeals).

3. The Commissioner (Appeals) held that mens rea was not necessary for imposing penalties under taxation laws, relying on the Supreme Court judgment in Gujarat Travancore Agency, Cochin v. CIT. It was concluded that misdeclaration was intentional to evade anti-dumping duty.

4. The appellants argued that they declared goods as per the supplier's invoice and purchase order for 4A grade, denying deliberate misdeclaration. Citing relevant Tribunal decisions, they contended that declarations based on foreign supplier documents do not constitute misdeclaration under Section 111(m) of the Customs Act.

5. The Senior Departmental Representative (SDR) acknowledged the lack of substantiated wilful misdeclaration in the original authority's order upheld by the Commissioner (Appeals).

6. Upon review, the Tribunal found no evidence of wilful misdeclaration in the case. The Commissioner (Appeals) based the penalty on the absence of mens rea, contrary to Tribunal decisions cited by the appellants. As per the Tribunal's precedent, the penalty under Section 112 was deemed unsustainable, leading to the setting aside of the penalty and allowing the appeal.

In conclusion, the Tribunal overturned the penalty imposed on the appellants, emphasizing the lack of wilful misdeclaration and the inconsistency with the Tribunal's established precedents regarding mens rea for penalty imposition under taxation laws.