2019 (5) TMI 1766 - AT - Customs

Valuation of imported goods - undervaluation - mis-declaration of description of goods - the consignment was found mainly of rags, though some part of the consignment was found to be of worn clothing, which was not ordered by the appellant importer - HELD THAT - The goods which are declared for less than ₹ 1 lakhs, have been valued more than ₹ 10 lakhs, i.e. the value has been increased 10 times approximately. In this view of the matter, it is found that the appellant has already suffered differential duty of ₹ 1,18,000/- and also suffered demurrage charges of ₹ 2,26,000/- (approximately), including the warehousing charges, as the goods were subject to 100% checking on first check basis after destuffing the container - in the interest of justice, redemption fine of ₹ 2,50,000/- is reduced to ₹ 1,00,000/- and penalty under Section 112 (a)(i) is reduced from ₹ 1 lakh to ₹ 25,000/-. Appeal allowed in part.

Summary

Issues: Misdeclaration of imported goods, confiscation of goods, valuation of goods, imposition of redemption fine and penalty

Misdeclaration of Imported Goods:
The case involved a partnership firm engaged in importing rags for trading. The firm imported a consignment declared as mixed rags but was found to contain worn clothing as well, which was not declared. The customs officers observed that 14 out of 56 bales contained worn clothing instead of rags. The firm requested leniency, attributing the error to a mistake by their supplier. The Joint Commissioner of Customs determined that the importer mis-declared worn clothing as rags to evade customs duty, leading to the confiscation of the goods under relevant sections of the Customs Act, 1962.

Confiscation of Goods:
The Commissioner held that the misdeclaration of worn clothing and undervaluation of rags made the imported goods liable for confiscation. The Commissioner ordered the assessment of the goods based on a redetermined assessable value, confiscated the offending goods, and provided an option for redemption by paying a fine. Additionally, a penalty was imposed on the importer for the act that rendered the goods liable for confiscation.

Valuation of Goods:
The appellant contested the proposed rates for valuation by the Revenue, arguing that differential duty was paid to minimize demurrage on the consignment. The appellant claimed that the consignment mainly consisted of rags, with only a part being worn clothing sent by mistake. The Commissioner upheld the valuation based on NIDB prices, resulting in a significant increase in the assessed value of the goods.

Imposition of Redemption Fine and Penalty:
The appellant appealed against the imposition of redemption fine and penalty, asserting that there was no deliberate misdeclaration and that the bill of entry was filed based on the bill of lading. The appellant sought a waiver of redemption fine and penalty, contending that there was no active violation of the law. The Tribunal reduced the redemption fine and penalty, considering that the appellant had already paid a significant amount in differential duty and demurrage charges. The appeal was allowed in part, granting the appellant a reduction in the redemption fine and penalty.

In conclusion, the Tribunal partially allowed the appeal, reducing the redemption fine and penalty imposed on the importer. The judgment highlighted issues of misdeclaration, confiscation of goods, valuation discrepancies, and the appropriate imposition of fines and penalties in cases of customs violations.