2015 (10) TMI 2832 - AT - Customs

Levy of penalty u/s 114AA of the Customs Act, 1962 - price declared is lower than the initial export price of US 2.50 per KG - export of certain quantities of metalised film to M/s. Alcan Packaging Strongpack Public Company Ltd., Thailand through CFS, Ludhiana - HELD THAT - It is an admitted fact on record that the impugned goods were originally exported by the appellant to its overseas buyer in February, 2010 and the same were rejected by its buyer in 2011 due to quality mis-matching. The goods in question were re-imported by the appellant nearly after 21 months from the date of original exportation. Since the impugned goods are not usable as such by the overseas buyer, the same were returned to the appellant at a lesser value. There is every possibility of reduction in price. It is not a case of the Department that the appellant while importing the said rejected goods has misdeclared or suppressed any other information to the Department. The penal provisions contained in Section 114AA of the Customs Act, 1962 cannot be invoked inasmuch as the appellant has not furnished any incorrect price to the Department at the time of filing of the Bill of Entry for re-importation of the rejected goods or suppressed any facts to the Department. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalty imposition under Section 114AA of the Customs Act, 1962 for declaring a lower value of re-imported goods compared to the original export price.

Analysis:
The case involved the appellant exporting metalised film to a buyer, which was rejected due to quality issues, and subsequently re-imported by the appellant at a lower value. The Customs Department objected to the declared value being lower than the initial export price, leading to penalty proceedings under Section 114AA of the Customs Act, 1962. The Commissioner (Appeals) reduced the penalty from Rs. 7 lakhs to Rs. 1 lakh. The Tribunal analyzed that the appellant did not misdeclare or suppress any information while re-importing the goods. As the appellant did not provide incorrect pricing information during the re-importation process, the penal provisions of Section 114AA could not be applied. Therefore, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

This judgment highlights the importance of accurate declaration of values during re-importation of goods and the limitations on invoking penal provisions under the Customs Act, 1962. The Tribunal emphasized the lack of misdeclaration or suppression of facts by the appellant, leading to the decision to overturn the penalty imposed by the Customs Department. The ruling serves as a precedent for cases where goods are re-imported at a reduced value due to quality issues, emphasizing the need for transparency in dealings with customs authorities to avoid penalties under the relevant legal provisions.