2003 (11) TMI 217 - AT - Customs

Summary

Issues:
1. Imposition of penalties under Section 114(i) of the Customs Act on three appellants.
2. Confiscation of 57,000 pairs of PVC soles cleared for export due to overvaluation.
3. Allegations of facilitating fraudulent DEPB benefits through inflated value declarations.
4. Denial of allegations by the appellants and support for the order by the Commissioner.
5. Interpretation of Sections 113(d) and 114(i) of the Customs Act in relation to confiscation and penalties.
6. Application of legal precedents, including the Supreme Court judgment in Commissioner of Customs (EP) Mumbai v. Prayag Exporters Pvt. Ltd., on confiscation of goods with inflated value.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved three appellants challenging a common order imposing penalties under Section 114(i) of the Customs Act. The penalties were related to the confiscation of 57,000 pairs of PVC soles cleared for export, allegedly overvalued to fraudulently claim DEPB benefits. The order detailed the role of each appellant in facilitating the shipment with inflated value declarations, leading to confiscation under Section 113(d) of the Act and subsequent penalties.

Upon considering submissions from both sides, the Tribunal noted the penalties were imposed under Section 114(i) based on the confiscation under Section 113(d). However, it was highlighted that the confiscation was not necessarily due to a contravention of any prohibition under the Customs Act or other laws. The Tribunal referred to a legal amendment in the Finance Act, 2003, which rendered export goods with misdeclared value liable for confiscation under Section 113(i) prospectively. Citing a Supreme Court judgment, it was held that goods with inflated value cannot be confiscated under Section 113(d), leading to the setting aside of the imposed penalties on the appellants.

In conclusion, the Tribunal allowed the appeals, setting aside the penalties imposed on the appellants due to the misinterpretation of Sections 113(d) and 114(i) in relation to confiscation and penalties. The judgment emphasized the importance of legal precedents, such as the Supreme Court ruling, in determining the appropriate application of laws regarding confiscation of goods with inflated values under the Customs Act.