2017 (5) TMI 1126 - AT - Customs

Mis-declaration of description and value of goods - redemption fine - penalty - Held that - This revision of value is made basically in terms of revised invoice produced by the importers themselves during the course of examination of the goods. Admittedly, the value of goods (permissible for import) was mis-declared, at the lower side, by 10 times. This shows the seriousness of the offence. A revised value of the permissible goods alone comes to ₹ 1,10,62,837/-. The Original Authority imposed a redemption fine of ₹ 15 lakhs, which works out to less than 15% of the assessable value. I find such a redemption fine is fair and reasonable in terms of Section 125 of the CA, 1962. The reduction of the said fine to ₹ 5 lakhs by the impugned order is not justified. There is no reason at all recorded for such reduction. The reasons recorded by the impugned order for setting aside the penalty is not legally justifiable. The provisions of Section 112(b) is correctly invoked for penalties on these Directors. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
Reduction of redemption fine and penalties imposed on the importer, justification for penalties on the directors.

Reduction of Redemption Fine and Penalties Imposed on the Importer:
The case involved misdeclaration of imported goods, including counterfeit branded items and undervaluation. The Original Authority imposed a redemption fine and penalties on the importer, which were later reduced by the Commissioner (Appeals). The Appellate Tribunal found the reduction unjustified, as the misdeclaration was significant, with goods undervalued by ten times. The revised value of permissible goods alone was assessed at a much higher amount. The Tribunal deemed the Original Authority's redemption fine fair and reasonable, disagreeing with the reduction by the Commissioner (Appeals) due to lack of justification. Similarly, the penalty on the importing company was reduced without adequate reasoning, which the Tribunal found unjustifiable and legally unsustainable. The Tribunal reinstated the original redemption fine and penalties imposed on the importer.

Justification for Penalties on the Directors:
The penalties imposed on the directors of the importing company were contested in the appeal. The Appellate Tribunal reviewed the evidence, including statements by the directors, which indicated their knowledge and involvement in the misdeclaration of goods during import. The directors were found to have a significant role in the offense, given their experience and ownership stake in the importing company. The Tribunal concluded that penalties under Section 112(b) of the Customs Act were appropriate for the directors, as their actions of filing misdeclared documents with customs warranted penal consequences. The Tribunal disagreed with the impugned order's rationale for setting aside the penalties on the directors, stating that the provisions of Section 112(b) were correctly invoked. Consequently, the Tribunal overturned the decision to not impose penalties on the directors and reinstated the penalties as per the original order.

In summary, the Appellate Tribunal ruled in favor of the Revenue, setting aside the reduction of the redemption fine and penalties on the importer while reinstating the original amounts. The Tribunal also upheld the penalties on the directors of the importing company, finding their involvement in the misdeclaration of goods justified and their actions warranting penal consequences under Section 112(b) of the Customs Act.