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2023 (7) TMI 596 - AT - CustomsLevy of penalty under section 112(a) of CA and redemption fine of Rs. 175,000 on conveyance - Old and used clothes cleared by misdeclaring the same as Mix Mutilated Rags - Appellant claims it to be a mistake committed by employee - HELD THAT - The submission made by the appellant that goods i.e. Old and used clothes cleared by misdeclaring the same as Mix Mutilated Rags appeared due to mistake of employee is untenable as clearing in DTA at the relevant time would have normally brought a good profit to the appellant as the Foreign Trade Policy at the relevant time had made the Old and Used clothes as the restricted item and working in SEZ environment where checks and examination are kept at the minimum, greater care on the part of the appellant was warranted. Therefore, the Commissioner (Appeals) has rightly, relying upon the decision of the Apex Court in PINE CHEMICAL SUPPLIERS VERSUS COLLECTOR OF CUSTOMS 1992 (9) TMI 111 - SUPREME COURT held that the goods are misdeclared, Section 112 gets attracted. This is specially so, when violation are accepted by the concerned party. Accordingly, the penalty under Section112 (a) is sustainable, however, the same is reduced to Rs. 1,00,000/-. Accordingly, the penalty under Section 112(a) is sustained but stands reduced to Rs. 1,00,000/-, similarly, the redemption fine of Rs. 35,000/- each on five truck clearing , carrying goods when intercepted is also reduced to Rs. 10,000/- each from Rs. 35,000/-, as the truck were not offending goods, per se - It is made clear that apart from above, the other elements of duty and penalty etc. were not contested before this court. Appeal allowed in part.
Issues involved:
The issues involved in the judgment are misdeclaration of goods, liability for penalty and confiscation under the Customs Act, imposition of redemption fine, and the contestation of penalty and redemption fine. Misdeclaration of Goods: The appellant, an SEZ Unit, declared certain goods as "Mix mutilated rags" and "Old and Used mutilated rags" under CTH 6310 for clearance in DTA. However, upon examination, officers found old and used clothes classifiable under CTH 6309. The officers held that the goods were misdeclared and liable for confiscation under section 111(d) & (m) of the Act, with the importer facing penalty under section 112(a). The fair value of the goods was determined by a government-approved valuer, leading to the calculation of differential duty. Liability for Penalty and Confiscation: The appellant accepted negligence on their part and took responsibility for paying the fine, penalty, and differential duty. The officers issued an order-in-original (OIO) confiscating the goods, imposing a redemption fine, penalty, and re-determining the total value under Rule 9 of the Rules. The Order-in-Appeal (OIA) upheld the OIO, stating that mens rea is not relevant for liability when goods are misdeclared. The appellant contested the penalty under section 112(a) and redemption fine on conveyance. Contestation of Penalty and Redemption Fine: The appellant argued that there was no wilful misdeclaration, attributing the incident to negligence by junior staff. They emphasized that the penalty should be commensurate with the offense and highlighted a statutory bar in imposing penalty when the duty liability is paid before notice issuance. The appellant also claimed that even if misdeclaration was wilful, the penalty should be restricted under amended section 28. They further contended that Section 111 does not allow for redemption fine on conveyance. Judgment and Reduction of Penalty: The Commissioner (Appeals) upheld the penalty and redemption fine based on detailed reasoning and legal precedents. The judgment acknowledged the misdeclaration of goods and upheld the penalty under Section 112(a), reducing it to Rs. 1,00,000. The redemption fine on trucks was also reduced to Rs. 10,000 each. The judgment emphasized that the penalty should be proportionate to the offense and that the misdeclaration attracted liability under Section 112. The appeal was partly allowed in the specified terms.
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