2016 (6) TMI 306 - AT - Customs

Imposition of redemption fine and penalty - Section 114A of the Customs Act, 1962 - Mis-declaration of description and quantity of goods - Held that - when the offending goods itself submitted to the mis-declaration of the description and quantity, that ipso-facto invites penal consequence under law. Since there is a patent mis-declaration as is revealed from the facts, levy of redemption fine is justified. Looking to the regular import of the goods by the appellant and also gravity of the matter, it is considered proper to reduce redemption fine to ₹ 2 lakhs which is nearly 10% ambit margin of the declared value and assessed value. So far as the penalty is concerned, the mis-declaration is apparent from the conduct of presentation of the Bill of Entry. As a preventive measure the penalty of ₹ 1 lakhs imposed by the ld. Commissioner (Appeals) does not call for any interference. The order above has been passed keeping in view of the law laid-down by the Apex Court in the case of CC, Mumbai Vs Mansi Impex 2011 (8) TMI 470 - Supreme Court of India . - Decided partly in favour of appellant

Summary

Issues: Mis-declaration leading to differential duty demand, imposition of redemption fine, levy of penalty under Customs Act, 1962.

Mis-declaration leading to differential duty demand:
The case involved a situation where the appellant's director was abroad, and the Clearing House Agent (CHA) incorrectly provided the weight instead of the length of the imported goods for assessment, resulting in a differential duty demand. The appellant argued that this technical error should not result in penalties or confiscation as there was no deliberate mis-declaration involved. The appellant contended that Section 125 of the Customs Act, 1962, was not applicable for imposing redemption fines and penalties under Section 114A of the Act.

Imposition of redemption fine:
The Tribunal noted that redemption fine is a penalty in rem, and when goods themselves indicate mis-declaration of description or quantity, it automatically attracts penal consequences. Given the evident mis-declaration in this case, the Tribunal found the levy of a redemption fine justified. The value of the goods was agreed at ?19 lakhs, and considering the gravity of the matter, the Tribunal reduced the redemption fine to ?2 lakhs, representing around a 10% margin between the declared and assessed values.

Levy of penalty under Customs Act, 1962:
Regarding the penalty, the Tribunal observed that the mis-declaration was evident from the presentation of the Bill of Entry. As a preventive measure, the penalty of ?1 lakh imposed by the Commissioner was upheld. The Tribunal found no grounds to interfere with the penalty decision.

Legal Precedent:
The Tribunal referred to a legal precedent set by the Apex Court in the case of CC, Mumbai, Mansi Impex 2011 (270) ELT 631 (SC) while passing the order. The judgment was made in consideration of the principles established in this case.

In conclusion, the Tribunal modified the Commissioner's order by reducing the redemption fine to ?2,00,000/- and upholding the penalty of ?1,00,000/-. The decision was based on the mis-declaration leading to a differential duty demand, the nature of redemption fines as penalties in rem, and the clear evidence of mis-declaration justifying the penalty under the Customs Act, 1962.