2017 (7) TMI 634 - HC - Customs

Misdeclaration of goods - The goods had actually originated from Taiwan and Korea but were falsely claimed to have originated from Singapore for claiming exemption - penalty - Held that - The record suggests that the said agency Marubeni Chemicals had supplied similar nature of goods to several agencies making the same false claim of origin of goods being Singapore. The Singapore customs authorities had carried out the investigation and found that all such certificates were forged - impugned order upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the CESTAT was correct in holding that the appellant had the intention to evade payment of customs duty?
2. Whether the CESTAT was correct in holding that the appellant made mis-declaration before customs?
3. Whether the CESTAT was correct in imposing a penalty on the Appellant under Section 114A of the Customs Act, 1962?
4. Any other question of law deemed fit by the High Court.

Analysis:

Issue 1: Intention to Evade Payment of Customs Duty
The appellant imported Butyl Acrylate Monomer claiming exemption from customs duty under a prevailing policy if the goods' origin was Singapore. However, intelligence from Singapore revealed that the agency involved had forged the certificate of origination, falsely claiming goods from Taiwan and Korea as Singaporean. Despite the appellant's disclosure and payment of the waived duty upon learning of the fraud, the Commissioner confirmed the duty demand and imposed a penalty under Section 114A. The High Court found that the customs department had prior intelligence about the fraud, indicating the appellant's false declaration, leading to the dismissal of the appeal.

Issue 2: Mis-Declaration Before Customs
The appellant's reliance on its post-disclosure actions to rectify the false declaration was insufficient as the customs department had already initiated an investigation based on intelligence regarding the fraudulent claims of origin by the agency involved. The Commissioner and the Tribunal concluded that the appellant had indeed made a mis-declaration, leading to the confirmation of duty demand and imposition of a penalty. The High Court upheld this finding based on the evidence of the agency's history of similar fraudulent activities and the forged certificates discovered by Singapore customs authorities.

Issue 3: Imposition of Penalty under Section 114A
The Commissioner of Customs, supported by the Tribunal, imposed a penalty equivalent to the value of customs duty evaded under Section 114A of the Customs Act, 1962. The penalty was upheld by the High Court due to the established false declaration by the appellant and the evidence of fraudulent activities by the agency involved. The penalty was deemed appropriate in light of the circumstances surrounding the importation of the goods and the subsequent investigation revealing the misrepresentation of the goods' origin.

Conclusion
The High Court dismissed the appeal, emphasizing that the decision was based on factual evidence and the appellant's failure to prove the absence of a false declaration at the time of import. The judgment highlights the importance of accurate declarations in customs matters and the consequences of misrepresentation, even if rectified post-fraud discovery.