2019 (1) TMI 1191 - AT - Customs

Export of prohibited item - huge quantity sent as Baggage - detailed examination of the baggage revealed that it consisted of 537 wood blocks of total weight 10,652 Kgs. which is less than the net weight 11,230 Kgs. as mentioned in the shipping bill - It was also pointed by him that wrong HS code and description were given by the CHA - penalty on appellant as well as on CHA - permission to export the goods - Held that - Admittedly, appellant Mr. Bernard Maurice Gerard Kuhne death with effect from 21.10.2009 has been acknowledged by this Tribunal but penalty continue to be in force as no express order was passed to that effect. Penalty being punitive in nature admittedly gets abated on the death of the person and in view of such legal position, penalty of ₹ 2,00,000/- imposed on deceased Bernard Maurice Gerard Kuhne is abated on his death that occoured on 21.10.2009. Penalty on other appellant have been set aside vide earlier order of this Tribunal and therefore the issue of confiscation of goods by the respondent department is required to be scrutinised in this appeal to determine its legally. Statement of the Partner of CHA Mr. Parvez Jehangir Irani was relied upon by the respondent Department to arrived at the conclusion that RITC number was mis-quoted as 44072910 instead of 44011000 but going by the relevant provisions of Section 3 & 11 of the Foreign Trade (Development & Regulation) Act, 1992 as well as Chapter 44 under Schedule-II of EXIM Policy, it can very well be said that CHA had intended the same to be Burmese imported teak wood made exclusively out of imported old and used wood and quoted it under RITC No. 44072910 for which export policy permits free export for imported logs/timber of all species other than CITES. The said statement is not submitted by either of the parties for scrutiny but as found from the record is that CHA had mistakenly declared it as Indian wood instead of imported Burmese teak wood - Further, even if the contention of the Commissioner of Customs is accepted that CHA partner admitted that the tariff items HS code should be 44011000, since item description covered under prohibited wood does not cover blocks that to made exclusively out of imported logs/timber, I have got no hesitation to conclude that the goods under confiscation, which the Assistant Commissioner of Customs, ICD Mulund (Export) informed to have been kept in container number TR2311935, are not prohibited goods that can be subjected to confiscation. The confiscation order is held as not in conformity to law and substituted appellant is here by permitted to export the goods to her home country the Netherlands - appeal is allowed and order passed by the Commissioner of Customs (General), Mumbai is here by set aside.

Summary

Issues:
1. Confiscation of teak wood blocks under Customs Act.
2. Misdeclaration of goods in shipping bill.
3. Penalty imposition post-death of appellant.
4. Legal scrutiny of confiscation order.

Issue 1: Confiscation of teak wood blocks under Customs Act:
The case involved the appeal against the order of confiscation of 537 teak wood blocks valued at ?21,02,287 in 2008 under Section 113(d) & (h) of the Customs Act. The deceased appellant purchased old Burma teak wood blocks for export, which were wrongly described in the shipping bill. Customs officials pointed out discrepancies, leading to a show-cause notice for confiscation and penalty imposition. The Commissioner confirmed the confiscation with an option for redemption fine of ?5,00,000. The Tribunal analyzed the legal aspects, including the misdeclaration of goods, transit permits, and export policy regulations. Ultimately, the Tribunal set aside the confiscation order, allowing the substituted appellant to export the goods to the Netherlands.

Issue 2: Misdeclaration of goods in shipping bill:
The deceased appellant misdeclared the goods in terms of number and weight in the shipping bill. The Customs Department, Forest Department NOC, and physical inspection revealed discrepancies in the declared and actual weight and number of wood blocks. Despite variations, the Tribunal noted that the misdeclaration did not result in revenue loss or financial gain. The misdeclaration was considered a violation of Section 50 of the Customs Act, leading to the confiscation order under Section 113(h). However, considering the negligible impact on duty liability and the absence of revenue implications, the Tribunal concluded that the misdeclaration did not warrant confiscation.

Issue 3: Penalty imposition post-death of appellant:
The deceased appellant passed away, and the penalty imposed on him was deemed abated due to his death. The Tribunal acknowledged the death but noted the absence of an express order abating the penalty. While penalties on other appellants were set aside in earlier orders, the penalty on the deceased appellant remained. However, as penalty is punitive and abates upon death, the Tribunal held that the penalty of ?2,00,000 imposed on the deceased appellant should be abated. The legal position regarding penalties upon death was crucial in determining the abatement of penalties post-mortem.

Issue 4: Legal scrutiny of confiscation order:
The Commissioner of Customs based the confiscation order on misdeclaration of goods and violation of export regulations. The Tribunal scrutinized the case records, transit permits, and communications to ascertain the nature of the wood blocks and the intent behind the misdeclaration. Despite discrepancies in descriptions and declarations, the Tribunal concluded that the goods were not prohibited items subject to confiscation. The Tribunal emphasized the importance of accurate declarations but considered the negligible variations in weight and number as unintentional errors without significant duty implications. The legal analysis led to setting aside the confiscation order and permitting the export of the goods to the appellant's home country.

In conclusion, the Tribunal's detailed analysis of the issues surrounding the confiscation of teak wood blocks under the Customs Act, misdeclaration in the shipping bill, penalty imposition post-death of the appellant, and legal scrutiny of the confiscation order resulted in setting aside the confiscation order and allowing the substituted appellant to export the goods without incurring additional fees.