2019 (8) TMI 1257 - AT - Customs

Seizure of imported goods - misdeclaration of goods - consignments consisting 229 bales, to the extent of 81 bales;81 bales were found to contain full pants and trousers in place of declared payjamas - penalties - HELD THAT - The reason put forth by the Learned Counsel for the appellant, for importing full pants in place of indented pajamas, is not at all forthcoming from the said letter. The said letter does give any reason for the misdeclaration of 81 bales of cargo. Therefore, it is difficult to believe the submissions of the appellant that they had no Knowledge of the misdeclaration of the cargo. We find that Learned Commissioner has found that the goods are misdeclared; the appellants having filed bill of entry have misdeclared the goods. The valuation adopted in the impugned order is arbitrary. The Learned Commissioner has not recorded any reason for rejecting the declared value in respect of 148 bales. He proceeded to redetermine the value of all the goods when the misdeclaration was only in respect of 81 bales. Commissioner proceeded to redetermine the entire quantity of goods without giving any reasons for rejecting the value of the goods. The impugned order does not refer to any Valuation Rules and it does not make it clear if the CVR, 2007 have been followed sequentially. The valuation declared by the appellant is to be accepted. However, it is required to redetermine the value of 81 bales in dispute, which were misdeclared - the issue needs to go back to the adjudicating authority for proper appreciation of the Customs Valuation Rules and to redetermine the value accordingly - appeal allowed by way of remand. Penalty - HELD THAT - The mens rea is not an essential ingredient either for the purposes of confiscation under Section 111 or for levy of penalty under 112(a)of the Customs Act, 1962. Therefore, the fact or otherwise of the appellant having intention or knowledge has no bearing on confiscation of the goods. To that extent, the impugned order is acceptable. The penalty imposable on the appellant will be equal to the duty that may be applicable on the 81 bales of garments misdeclared, subject to condition laid down in Section 112 (b) of the Customs Act, 1962.

Summary

Issues:
Importation of misdeclared goods, confiscation, imposition of penalties, valuation of goods, misdeclaration of goods, imposition of penalty based on revised value, adherence to Customs Valuation Rules.

Importation of Misdeclared Goods:
The appellant imported two consignments of ready-made garments, with one containing full pants instead of the declared pajamas. The Department seized the materials due to misdeclaration and issued a show-cause notice proposing confiscation and penalties. The Commissioner adjudicated the notice, confiscating the goods, revaluing them, and imposing penalties on the appellant and an authorized employee of a firm. The appellant claimed innocence, citing a fax message from their foreign supplier explaining the mistake in loading the goods. However, the Tribunal found the appellant's defense unconvincing, upholding the confiscation due to misdeclaration.

Valuation of Goods:
The Tribunal criticized the arbitrary valuation adopted in the impugned order. The Commissioner failed to provide reasons for rejecting the declared value of 148 bales, instead redetermining the value of all goods despite misdeclaration in only 81 bales. The order lacked reference to Valuation Rules or clarity on sequential adherence to CVR, 2007. The Tribunal deemed the order unsustainable and directed the adjudicating authority to accept the declared value for 148 bales and reevaluate the 81 misdeclared bales in accordance with the law. The penalty imposed based on the revised value of all goods was deemed unjustified, leading to a reduction to an amount equivalent to the applicable duty on the misdeclared bales.

Confiscation and Penalties:
The Tribunal upheld the confiscation due to misdeclaration, emphasizing that mens rea was not essential for confiscation or penalty under the Customs Act, 1962. However, it deemed the redemption fine should align with the extent of misdeclaration and profit margin. The imposed penalty was reduced to match the duty applicable on the misdeclared goods. Recognizing the prolonged storage of goods and their diminished value, the fine in lieu of confiscation was restricted to a nominal amount. The Tribunal directed the Commissioner to issue a new order within 12 weeks, adhering to the directions provided regarding valuation and penalties.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT KOLKATA highlights the key issues of importation of misdeclared goods, valuation discrepancies, and the imposition of penalties based on the revised value of goods, providing a comprehensive understanding of the legal intricacies involved in the case.