2017 (7) TMI 788 - AT - Customs

Misdeclaration of quantity and value - it was alleged that inferior quality cotton garments were being exported with inflated values for obtaining excess drawback fraudulently - confiscation - Held that - the impugned goods of inferior quality have been found to be mis-declared in terms of quantity, and also overinvoiced to claim ineligible amount of drawback. In these circumstances, when the lower authority has arrived at such findings and conclusions, by corollary, the goods also became liable for confiscation under Section 113 (d) and (i) of the Customs Act, 1962 - The fact that they have been allowed to be re-exported at a lower value to a different buyer will not automatically redeem or erase the act of attempting to export those goods initially by misdeclaration of quantity and value and accordingly, they should have been confiscated in terms of Section 113 of the Act and if found proper, given the exporter an option to redeem the goods in lieu of confiscation on imposition of fine under Section 125 ibid - confiscation upheld. Redemption fine - Held that - for the limited purpose of arriving at the quantum of redemption fine, keeping in mind the facts and circumstances of the case, the matter is being remanded to the adjudicating authority. Appeal allowed by way of remand.

Summary

Issues: Customs Act violations, Confiscation of goods, Imposition of penalties

Customs Act Violations:
The case involved the detention of export consignments of Knitted T-Shirts due to suspicions of exporting inferior quality garments with inflated values. Upon examination, discrepancies were found in the quantity and quality of the goods declared in the shipping bills. The exporter admitted to dispatching the wrong consignment and sought permission to ship to a different buyer at a reduced value. The lower authority imposed penalties on individuals involved for misdeclaration to obtain excess drawback fraudulently. The adjudicating authority confirmed that the goods were intentionally misdeclared to claim ineligible drawback, making them liable for confiscation under Sections 113 (d) and (i) of the Customs Act, 1962.

Confiscation of Goods:
The Department appealed against the impugned order, arguing that the goods should have been confiscated under Section 113 of the Customs Act, and a fine imposed in lieu of confiscation under Section 125. The adjudicating authority did not pass any order on the goods despite the violations, leading to the appeal for confiscation. The Tribunal agreed with the Department, stating that the goods, despite being allowed for re-export at a lower value, should have been confiscated due to intentional misdeclaration and attempts to claim ineligible drawback. The matter was remanded to the adjudicating authority for determining the quantum of redemption fine, with the requirement to provide a suitable opportunity to the respondent before passing any order.

Imposition of Penalties:
The Department contested the penalties imposed under Section 114 (iii) of the Customs Act on the exporters and related individuals, arguing that confiscation of goods should have preceded the penalties. The Tribunal concurred, stating that penalties should be imposed on individuals who render goods liable to confiscation, which was the case here due to intentional misdeclaration. The adjudicating authority's decision to penalize without confiscating the goods was deemed legally incorrect, leading to the appeal's success for confiscation and potential imposition of fines.

This detailed analysis of the judgment highlights the violations under the Customs Act, the necessity for confiscation of goods, and the correct legal procedure for imposing penalties in such cases.