2020 (3) TMI 771 - AT - Customs

Mis-declaration of imported goods - Heavy Melting Steel Scrap - enhancement of value of imported goods - N/N. 21/2002-Cus - HELD THAT - The appellant has nowhere disputed about the mis-declaration of description of goods and enhancement of value of the imported goods. All along the submission of the appellant is that there is no malafide intention in mis-declaring the description of the goods. We find force in the submission of the appellant that both the descriptions i.e. Heavy Melting Scrap or Shredded Scrap falls under the same tariff description as well as same Customs Tariff Heading. The rate of duty is same. Moreover, the differential duty on enhancement value is CVD which is available to the appellant as Cenvat credit. When this is undisputed fact, we find that there is no malafide intention on the part of the appellant. However, it is admitted fact that description i.e. Heavy Melting Scrap was wrongly declared as against the actual material of Shredded Scrap. Considering the overall facts and circumstances of the case and as no malafide intention exists, we are of the view that redemption fine and penalty is too harsh which needs reduction. Accordingly, we reduce the redemption fine from ₹ 3,00,000/- in each case to ₹ 1,00,000/- in each case and penalty in each of the appeals is reduced from amount equivalent amount of duty to ₹ 20,000/- (Rupees twenty thousand only) in each appeal. Appeal allowed in part.

Summary

Issues: Mis-declaration of imported goods, differential duty, redemption fine, penalty under Customs Act, 1962

Mis-declaration of Imported Goods:
The appellant declared imported goods as Heavy Melting Steel Scrap, but upon examination, they were found to be Shredded Scrap. The transaction value discrepancy led to the goods being liable for confiscation. The Adjudicating Authority imposed penalties, demanded differential duty, and ordered assessment at a higher rate for mis-declaration.

Differential Duty and Redemption Fine:
The Commissioner (Appeals) upheld the demand for differential duty and redemption fine in all three cases. The appellant argued that both types of scrap were used for melting purposes, emphasizing no malafide intention. They cited various judgments to support their case.

Penalty under Customs Act, 1962:
The penalty was initially set at an amount equivalent to duty but was later reduced by the Commissioner (Appeals). The appellant contended that there was no intention to evade duty payment and that the penalty was excessive. The appellant argued that the penalty should not be imposed under Section 114A of the Customs Act, 1962, as there was no willful mis-declaration.

Judgment Analysis:
The Tribunal noted the mis-declaration of goods but found no malafide intention on the appellant's part. Both types of scrap fell under the same tariff description and Customs Tariff Heading, with the same rate of duty. The differential duty on enhanced value was available to the appellant as Cenvat credit. While acknowledging the mis-declaration, the Tribunal considered the lack of malafide intention and reduced the redemption fine and penalty, deeming the initial penalties too harsh.

Conclusion:
The Tribunal modified the impugned orders, reducing the redemption fine from ?3,00,000 to ?1,00,000 in each case and the penalty from the equivalent amount of duty to ?20,000 in each appeal. The appeals were partly allowed based on the absence of malafide intention despite the mis-declaration of goods.