2020 (2) TMI 235 - AT - Customs

Imposition of redemption fine and penalty - mis-declaration of country of origin of goods in the bills of entry - import of Bitumen - prohibited goods or not - HELD THAT - In the present case there is no dispute that the impugned goods i.e., bitumen is not prohibited goods either under the Customs Act or Foreign Trade Policy or any other law in force at the time of importation of goods and the Customs in the show cause notice has admitted this fact. It is also a fact that there is no prohibition of impugned goods from Iran either under the Customs Act or Foreign Trade Policy - Further, the only allegation against the appellant in the present case is that in the bill of entry filed by them, they have wrongly mentioned the country of origin as UAE whereas in fact the country of origin is from Iran - After perusal of various statements made by the various persons during the course of investigation including that of the appellant, it is found that nobody has spoken against the appellant that the appellant is in any way involved in the manipulation of changing the country of origin documents. The appellant has filed the bill of entry and showed the country of origin as UAE on the basis of documents supplied to him by the supplier based at UAE. Further no document has been produced by Revenue on record to show the involvement of appellant in any way in the said mis-declaration. Further, in the present case the appellant has not claimed any preferential rate of duty. After examining the provisions of Section 111(d) and 111(m), it is found that both the provisions are not applicable in the fact and circumstances of this case. Further, no mala fides has been brought on record on the part of appellant so as to impose penalties on the appellant under Section 112(a) and Section 114AA of the Customs Act, 1962. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Mis-declaration of 'country of origin' in the bills of entry.
2. Applicability of Section 111(d) and 111(m) of the Customs Act, 1962.
3. Imposition of redemption fine and penalties under Sections 112(a) and 114AA of the Customs Act, 1962.

Issue-Wise Detailed Analysis:

1. Mis-declaration of 'country of origin' in the bills of entry:
The appellant was alleged to have mis-declared the 'country of origin' of bitumen shipments as UAE instead of Iran. The investigation revealed that the vessel MT CLAYTON II had loaded bitumen originally at Port Bandar Abbas, Iran, and then proceeded to Karwar Port. The import documents falsely indicated the port of loading/country of origin as Sharjah/UAE. The appellant contested that they declared the 'country of origin' based on documents provided by the supplier in Dubai and had no involvement in manipulating the documents.

2. Applicability of Section 111(d) and 111(m) of the Customs Act, 1962:
The appellant argued that Section 111(d) and 111(m) were not applicable. Section 111(d) pertains to goods imported contrary to any prohibition, but the bitumen was not prohibited under any law. Section 111(m) applies when imported goods do not correspond to the value or particulars declared in the bills of entry. The appellant claimed no preferential duty rate and relied on supplier documents for the 'country of origin'. The court found no evidence of the appellant’s involvement in document manipulation and noted that the bitumen was not prohibited goods.

3. Imposition of redemption fine and penalties under Sections 112(a) and 114AA of the Customs Act, 1962:
The Commissioner imposed a redemption fine of ?25,00,000 and penalties under Sections 112(a) and 114AA. The appellant argued there was no mala fide intention or evidence of their involvement in document manipulation. The court referred to previous judgments, including Oriental Containers Ltd. vs Union of India, where it was held that if the importer is an innocent victim of fraud by the foreign supplier, confiscation and penalties are not justified. The court concluded that no mala fides were proven against the appellant, and both Section 111(d) and 111(m) were inapplicable.

Conclusion:
The court set aside the impugned order, finding no legal basis for the confiscation and penalties. The appeal was allowed, granting consequential relief to the appellant. The decision emphasized the lack of evidence implicating the appellant in the mis-declaration and upheld the principle that importers should not be penalized for fraud committed by foreign suppliers without their knowledge or involvement.