2008 (4) TMI 130 - AT - Customs

Confiscation of imported goods (second-hand machines) for misdeclaration of value and import without licence On inspection by the Chartered Engineer, machines were found more than 10 years old and required licence for its import - appellants submission that they had not placed order for machines older than ten years has not been reliably controverted - misdeclaration not established - though the confiscation and penalties are legal, penalties are reduced

Summary

Issues:
1. Enhanced value of goods declared by the appellants
2. Confiscation of imported goods for misdeclaration of value and import without license
3. Penalties imposed on the appellants
4. Relinquishment of title to the goods by the appellants
5. Allegation of misdeclaration of value
6. Reduction of penalties imposed

Analysis:

1. The Commissioner of Customs enhanced the value of the goods declared by the appellants and confiscated the imported goods due to misdeclaration of value and import without a license. Sections 111(d) and 111(m) of the Customs Act, 1962 were invoked for confiscation, and penalties of Rs. 1,30,000/- and Rs. 3,40,000/- were imposed on the appellants. The appeals aimed to vacate the penalties imposed, with the appellants requesting adjournments during the hearing process.

2. The appellants had imported second-hand machines, which were found to be much older than the declared year of manufacture upon inspection by a Chartered Engineer. The machines required a license for import as they were over 10 years old. The assessable value of the machinery imported by the appellants was revised based on expert advice, leading to the relinquishment of title to the goods by the appellants under Section 23(2) of the Customs Act, 1962.

3. The appellants pleaded that they had ordered machines of the declared year of manufacture, but the supplier shipped older machines against the purchase order. They found it economically unviable to take delivery of the goods due to the enhanced assessable value. The appellants surrendered the machines as taking delivery was not feasible economically, leading to the imposition of penalties, which they sought to vacate in the appeal.

4. Upon careful consideration of submissions and case records, the Member (T) found that the appellants had suffered losses by surrendering the goods. The allegation of misdeclaration of value was not reliably controverted, and the penalties imposed were deemed a little harsh. Referring to a previous judgment, the Member reduced the penalties from Rs. 1,30,000/- and Rs. 3,40,000/- to Rs. 30,000/- and Rs. 1,00,000/- respectively, exercising discretion judiciously considering all relevant circumstances.

5. The reduction of penalties was based on the principle that penalty imposition for failure to carry out a statutory obligation should be judicious and not automatic. The Member's decision aimed to balance the legal requirements with the circumstances of the case, ultimately disposing of the appeals with reduced penalties pronounced in open court on 4-4-2008.