2022 (6) TMI 1229 - HC - Customs

Rectification of mistake - error apparent on the face of record or not - import of induction cookers in the semi knocked down condition - mis-declaration of goods or not - MRP was declared in the bill of entry or not - demand of differential duty alongwith interest and penalty - HELD THAT - In the proceedings before the Commissioner (Appeals) and CESTAT, the company has alone preferred the appeal and not the petitioner, but in the CESTAT order it has been referred as the petitioner and the company have preferred the appeal and thereafter, the appeal was allowed by setting aside the penalty imposed on the petitioner. Finding error apparent, the department has filed a petition and such reference of petitioner alone was deleted. In the CESTAT order, setting aside of penalty imposed has been accepted by the department and the department had not filed any appeal and hence, the CESTAT order has become final. The order of the CESTAT is that the imported products of the petitioner were not permitted for sale to the consumer before mandatory testing. The classification under the Custom Tariff Act, 1975 cannot provide the escapement from the legal metrology Act 2009. Goods that are not subject to prescription or declaration maximum retail price legal metrology Act, 2009 do not come within the ambit of Section 4 (a) of Central Excise Act 1944. In view of the same, the levy of differential duty in the order by the lower authority was set aside. Hence there is no mis-declaration. The foundation aspect of the case proceeded by the department against the company as well as the petitioner is no more inexistence. The petitioner as managing director has been imposed penalty which is a consequent lapse on the part of the misdeclaration by the company. Further, the foundation aspect of the department is set aside. The petitioner, who was imposed consequential penalty, if proceeded, would be is eligible to the enure benefit of the order passed by the CESTAT - Petition allowed.

Issues Involved:
1. Mis-declaration of imported goods.
2. Valuation of goods and differential duty.
3. Imposition of penalties under the Customs Act, 1962.
4. Appeals and rectification of the CESTAT order.
5. Jurisdiction and judicial review under Section 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Mis-declaration of Imported Goods:
The petitioner, Managing Director of M/s. Innobiz Electronic Private Ltd., imported parts of 'Cookmate' brand induction cookers in semi-knocked down condition under BE No. 3579164/23.05.2021. The Directorate of Revenue Intelligence (DRI) found discrepancies in the declared and actual quantities and values of the goods. The goods were declared as spare parts, but the DRI found them to be induction cookers in semi-knocked down condition. The DRI issued a show cause notice for mis-declaration and undervaluation.

2. Valuation of Goods and Differential Duty:
The adjudicating authority, Additional Commissioner of Customs, determined that the goods were undervalued under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 r/w. Section 14(1) of the Customs Act, 1962. The value was re-determined, and a differential duty of Rs. 12,90,942/- was demanded. A redemption fine of Rs. 8,00,000/- was also imposed under Section 125 of the Customs Act.

3. Imposition of Penalties under the Customs Act, 1962:
The adjudicating authority imposed penalties on M/s. Innobiz Electronic Private Ltd. and its Managing Director under Sections 112(a), 114A, and 114AA of the Customs Act, 1962. Specifically, a penalty of Rs. 12,90,942/- was imposed on the company and Rs. 5,00,000/- on the Managing Director.

4. Appeals and Rectification of the CESTAT Order:
The company filed an appeal before the Commissioner of Customs (Appeals), which was dismissed. Subsequently, the company appealed to the Customs Excise and Service Tax Appellate Tribunal (CESTAT), which set aside the adjudicating authority's order based on the Supreme Court's decision in Collector of Customs, Bangalore v. Maestro Motors Ltd. The CESTAT held that the goods were not subject to the Legal Metrology Act, 2009, and thus not liable for the declared maximum retail price under Section 4A of the Central Excise Act, 1944. However, the CESTAT erroneously recorded that the petitioner had also appealed, which was later rectified to exclude the petitioner.

5. Jurisdiction and Judicial Review under Section 226 of the Constitution of India:
The petitioner argued that the penalty imposed on him was erroneous since the foundation of the case against the company was set aside by the CESTAT. The petitioner cited the decision in Electronic Corporation of India vs. Union of India, asserting that judicial review under Section 226 of the Constitution cannot be diluted by statutory provisions. The court agreed, noting that the foundation aspect of the case against both the company and the petitioner was no longer in existence, and any further action would be merely ritualistic.

Conclusion:
The court found that the foundation of the department's case was set aside by the CESTAT, and thus the penalty imposed on the petitioner was also set aside. The writ petition was allowed, and the penalty on the petitioner was annulled. The court's order was based on the peculiar facts and circumstances of the case, emphasizing the importance of judicial review and fair adjudication.

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