2023 (7) TMI 967 - AT - Customs

Misdeclaration of quantity of imported goods - rejection of transaction value - re-determination of value on the basis of values of contemporaneous imports of goods - difference between the first check and second check of the goods - Confiscation - redemption fine - penalty - HELD THAT - It is undisputed that the appellant filed a bill of entry declared certain goods and on examination, 42% more goods were found by the customs authorities. Learned counsel for the appellant emphasized that the excess quantity was found during first check examination - It is found that the law does not distinguish between the first check and the second check. What is important if the appellant made the correct declaration in the bill of entry or not. The bill of entry was filed on 20.09.2017 by the appellant. It does not matter whether the apprising group, thereafter, decides to assess the goods first based on the documents and then gets them examined or gets the goods examined first. In both cases, the mis-declaration in the bill of entry is already complete. It also needs to be pointed out that the SIIB officers also received specific intelligence about this mis-declaration and place an alert in the customs EDI system. On examination, the mis-declaration was proved. The difference in quantity is substantial as 42% more goods were imported then what were declared. When excess quantity of goods were found, it was logical for the officer assessing the bill of entry to reject the transaction value because, the transaction value reflected in the invoices and other documents was for declared quantity and not for the quantity actually imported. Once the declared assessable value is rejected under Rule 12 of the valuation rules, valuation should be proceeded under Rules 4 through 9. In this case, rule 5 of the Valuation Rules was applied and the assessable value was enhanced from Rs. 40,62,307/- to Rs. 43,42,301/-. Consequently, the duty liability increased by Rs. 2,79,994/- and the re-determined value has been accepted by the importer in its letter dated 06.10.2017. Therefore, there are no infirmity whatever in re-assessing duty on the imported goods. In this case, the goods were found to be in excess of the entry made i.e. the bill of entry and, therefore, they were liable to confiscation under section 111(l). The imported goods also did not correspond in value and, therefore, were also liable for confiscation under section 111(m). Redemption Fine - HELD THAT - Having confiscated the goods worth Rs. 43,42,301/- the Additional Commissioner allowed the redemption on a fine of Rs. 4,50,000/- which is about 10% of the value of the goods. Section 125 of the Act places the restriction that the amount of fine cannot exceed the market value of the goods. In the factual matrix of this case, it is found that the redemption fine imposed is just and fair. Penalty - HELD THAT - The adjudicating authority has correctly held that the appellant had knowingly mis-declared the value of the quantity of the goods in the bill of entry and impose penalty under section 114 AA. The Commissioner (Appeals) has, in the impugned order correct by upheld this penalty. The impugned order is correct and proper and calls for no interference - Appeal dismissed.

Summary

Issues Involved:
1. Legality of the order passed by the Additional Commissioner.
2. Validity of penalties imposed under Section 112(a)(ii) and Section 114AA of the Customs Act, 1962.
3. Appropriateness of the redemption fine under Section 125(1) of the Customs Act, 1962.
4. Confiscation of goods under Sections 111(l) and 111(m) of the Customs Act, 1962.

Summary:

Issue 1: Legality of the order passed by the Additional Commissioner
The appellant, M/s Surendra Electricals, filed a bill of entry to clear imported LED lights. The consignment was subjected to a first check, revealing discrepancies in the declared and actual quantities. The Special Intelligence and Investigation Branch (SIIB) found the actual weight to be 21,660 kg against the declared 15,231 kg. The appellant waived the requirement of a show cause notice (SCN) and personal hearing, leading to a re-assessment of the bill of entry. The Additional Commissioner rejected the transaction value, re-determined it, confiscated the goods, and imposed fines and penalties. The Commissioner (Appeals) upheld this order.

Issue 2: Validity of penalties imposed under Section 112(a)(ii) and Section 114AA of the Customs Act, 1962
The appellant argued that the penalties were unsustainable as there was no intentional mis-declaration. However, the Tribunal found that the excess quantity of goods justified the rejection of the declared value and the imposition of penalties. The penalty under Section 112(a)(ii) was deemed fair and proper as it was only Rs. 20,000/-. The penalty under Section 114AA was also upheld, as the appellant's mis-declaration was considered intentional, inferred from the facts and circumstances of the case.

Issue 3: Appropriateness of the redemption fine under Section 125(1) of the Customs Act, 1962
The appellant contended that the demurrage and detention charges were not considered while imposing the redemption fine. The Tribunal found the redemption fine of Rs. 4,50,000/-, which is about 10% of the value of the goods, to be just and fair. Section 125 permits a fine not exceeding the market value of the goods, and the imposed fine was within this limit.

Issue 4: Confiscation of goods under Sections 111(l) and 111(m) of the Customs Act, 1962
The Tribunal upheld the confiscation of goods, as the excess quantity imported justified action under Sections 111(l) and 111(m). The goods did not correspond in value and quantity with the entry made, validating the confiscation and subsequent penalties.

Conclusion:
The Tribunal found no infirmity in the re-assessment, confiscation, and penalties imposed by the Additional Commissioner and upheld by the Commissioner (Appeals). The appeal was rejected, and the impugned order was deemed correct and proper. The decision was pronounced in open court on 24/07/2023.