2020 (11) TMI 543 - AT - Customs

Misdeclaration of description of goods - goods declared as polyester filament yarn, which, upon examination, was found to be chenile yarn - Confiscation - Penalty - HELD THAT - The value had not been re-determined under section 14 of Customs Act, 1962 despite the goods having been re-classified under chapter 56 of First Schedule to Customs Act, 1962. However, in the statement recorded by the investigating officer, the importer had admitted to error in description and tariff item, corresponding to the description of the goods, in the bill of entry. The argument of Learned Counsel that the revised description, as polyester feather yarn , is the same as polyester filament yarn in the original declaration is, therefore, not tenable and may have been an arguable submission if the revised classification was also disputed in this appeal. There is no finding that goods were undervalued - The fine determined for redemption and the penalty imposed appear disproportionate. Therefore, while upholding the confiscation of impugned goods under section 111(m) of Customs Act, 1962, the ends of justice will be served by restricting the fine to ₹ 50,000 and penalty under section 112(a) of Customs Act, 1962 to ₹ 50,000. Appeal allowed in part.

Summary

Issues:
1. Validity of confiscation and penalty imposed under sections 111(m) and 112(a) of Customs Act, 1962.
2. Allegations of mis-declaration of value and misclassification of goods.
3. Applicability of exemption notifications and privilege claims.
4. Interpretation of provisions related to confiscation and penalty.
5. Determination of fine and penalty amounts.

Analysis:

Issue 1: Validity of Confiscation and Penalty:
The appeal challenged the order-in-original imposing a fine of ?5,00,000 for redemption of confiscated goods under section 111(m) of the Customs Act, 1962, and a penalty of ?2,00,000 under section 112(a) of the same Act. The appellant contended that the confiscation was unjustified and lacked valid grounds. The Tribunal examined the facts and circumstances leading to the impugned order and considered the arguments presented by both parties.

Issue 2: Mis-declaration and Misclassification:
The appellant imported 'polyester filament yarn' but declared it as such under a different tariff item. Upon examination, it was found to be 'chenile yarn' falling under a different classification. The appellant argued that there was no wrongful intent in the classification chosen, as it did not affect the valuation or duty rates. The adjudicating authority alleged mis-declaration of value without concrete evidence. The Tribunal noted discrepancies in the description and tariff item declared in the bill of entry and the subsequent admission of error by the importer, leading to the invocation of section 111(m) for misdeclaration.

Issue 3: Exemption Notifications and Privilege Claims:
The appellant did not claim any privilege or concessional rate of duty under relevant notifications based on the declared classification. The Tribunal emphasized that misclassification for availing ineligible exemptions could lead to confiscation, even if it did not impact duty rates. The appellant's intent to misclassify for exemption benefits, thwarted by intelligence alerts, was a factor considered in upholding the confiscation and penalty.

Issue 4: Interpretation of Provisions:
The Tribunal analyzed the applicability of section 111(m) of the Customs Act, 1962 concerning misdeclaration of value and particulars in bills of entry. It clarified that the provision is not limited to differential duty implications but encompasses any errors in declarations. The Tribunal distinguished the present case from precedent judgments and upheld the confiscation and penalty imposed based on the facts and legal provisions.

Issue 5: Determination of Fine and Penalty:
While affirming the confiscation under section 111(m), the Tribunal found the fine and penalty amounts disproportionate. Considering the lack of undervaluation findings and the excessive amounts determined, the Tribunal modified the fine to ?50,000 and the penalty under section 112(a) to ?50,000, aligning with the principles of justice. The appeal was allowed in part for this modification.

This detailed analysis of the legal judgment highlights the key issues, arguments, and conclusions reached by the Appellate Tribunal CESTAT MUMBAI in the case, providing a comprehensive overview of the decision.