2017 (4) TMI 368 - AT - Customs

Imposition of Penalty - mis-declaration of goods - whether the adjudicating authority was correct in imposing penalty of ₹ 50,000/- on M/s. Weizman Associates (main appellant) and ₹ 10,000/- on the individual under the provisions of 112(a) and 112(b) of CA, 1962 for the absolute confiscation of the goods, which according to the adjudicating authority, were misdeclared? - Held that - main appellant had abandoned the goods due to litigation which was entered by him in form of filing a writ petition before the Hon ble High Court of Bombay, the provisions of Rule 23(2) of the CA, 1962 does indicate abandonment of the goods but at the same time, it does not give any immunity from imposition of penalty under the provisions of 112 of the CA, 1962 - The adjudicating authority was correct in imposing penalties on the main appellant, another appellant. However, the penalties imposed are disproportionate to the issue in hand. Accordingly, penalty imposed on the main appellant reduced to ₹ 25,000/- and ₹ 5,000/- on the individual - appeal allowed - decided partly in favor of appellants.

Summary

Issues:
Imposition of penalty under Sections 112(a) and 112(b) of Customs Act, 1962 for misdeclaration of goods leading to absolute confiscation.

Analysis:
The appeal challenged the imposition of penalties of ?50,000 on the main appellant and ?10,000 on an individual for misdeclaration of goods, resulting in absolute confiscation. The main appellant imported ladies ensembles, which were later deemed to be suits, leading to misdeclaration. The appellant abandoned the goods during legal proceedings. The main argument was that once goods are abandoned, penalties should not apply, citing precedent. The Departmental Representative argued that abandonment only occurred after misdeclaration was discovered, justifying the penalties. The Tribunal found the goods were misdeclared and absolutely confiscated under Section 111(m) of the Customs Act. Despite abandonment, penalties were upheld under Section 112, albeit reduced to ?25,000 and ?5,000 for the main appellant and individual, respectively. The Tribunal noted that abandonment did not exempt from penalties, and while legal remedies were exhausted before abandonment, the penalties were justified due to the misdeclaration.

This judgment clarifies the application of penalties under the Customs Act for misdeclaration leading to absolute confiscation. It highlights that abandonment of goods does not automatically exempt from penalties, especially when misdeclaration is involved. The Tribunal emphasized the importance of accurate declaration and upheld penalties, albeit reducing them due to disproportionality. The decision also underscores the significance of exhausting legal remedies before abandonment and how it may impact penalty considerations. Ultimately, the judgment provides guidance on penalty imposition in cases of misdeclaration despite goods abandonment during legal proceedings.