2005 (7) TMI 149 - AT - Customs

Confiscation and penalty - Post parcels - Misdeclaration of the goods - Penalty - HELD THAT - Following the view taken by the Division Bench in the case of M. Vasi 2002 (11) TMI 135 - CEGAT, MUMBAI , I find that the allegation of misdeclaration of description and value of goods raised against the appellant cannot be sustained. The only ground for confiscation of the goods is misdeclaration. There being no misdeclaration, the confiscation of the goods cannot be sustained. Therefore, the confiscation (along with fine) is set aside. Consequently, the penalty also is vacated inasmuch as penalty u/s 112 is dependent on confiscability of goods u/s 111 of the Act. The appellant is entitled to release of the goods against payment of appropriate duty of customs. For the purpose of payment of duty, the goods require to be correctly valued. It appears from the records that the lower authorities did not even attempt valuation in terms of the relevant Valuation Rules. The value declared by the supplier is HK 2500. It appears from the records that, in his letter dated 12-3-2003, the appellant, inter alia, claimed that the contents of the baggage had been correctly declared. Hence it has to be held that the appellant (importer) accepted the exporter's declaration. In other words, HK 2500 should be treated as the transaction value. It is up to the Customs authorities to inquire into the correctness of this value. Hence, after rejecting the value of Rs. 5 lakhs estimated by the lower authorities, I direct the original authority to determine the correct value of the goods under the Customs Valuation Rules read with Section 14 of the Customs Act after giving the appellant a reasonable opportunity of being heard. It will be open to the appellant to clear the goods by paying the appropriate duty. In the result, the impugned order gets set aside and the appeal stands allowed by way of remand

Summary

Issues:
1. Seizure of goods misdeclared for import and subsequent confiscation and penalty.
2. Interpretation of Section 82 of the Customs Act regarding misdeclaration and importer's responsibility.
3. Validity of confiscation and penalty based on misdeclaration.
4. Correct valuation of goods for customs duty payment.

Analysis:

1. The case involved the detention of a parcel from Hong Kong containing memory modules misdeclared as "memory modules" valued at HK $2500. The goods were seized under Section 110 of the Customs Act due to misdeclaration. The appellant, claiming ownership, was arrested, and subsequent legal proceedings led to the original authority ordering absolute confiscation of goods worth Rs. 5 lakhs and imposing a penalty of Rs. 15,000. The Commissioner (Appeals) modified the confiscation to redemption fine of Rs. 2,50,000 but upheld the penalty. The appellant challenged the confiscation and penalty in the present appeal.

2. The appellant argued that misdeclaration charges were not sustainable as per Section 82 of the Customs Act. The appellant's counsel referenced a Tribunal decision stating that the declaration on the goods' label by the supplier is not the importer's declaration. The appellant contended that since there was no misdeclaration by him, the goods should not be liable for confiscation, and thus, he should not be penalized. The Respondent, however, supported the lower appellate authority's findings, emphasizing the appellant's original inculpatory statement as admission of misdeclaration.

3. The Tribunal analyzed Section 82 of the Customs Act, noting that the description and value declared by the supplier on the label do not constitute the importer's declaration. Citing a previous case, it highlighted the distinction in requirements for declarations based on the mode of import. As misdeclaration was the sole ground for confiscation, and in the absence of misdeclaration by the appellant, the Tribunal set aside the confiscation and penalty, as penalty under Section 112 is contingent on goods' confiscability under Section 111.

4. The Tribunal directed the release of goods upon payment of appropriate customs duty, emphasizing the need for correct valuation. It noted the lack of valuation attempts by lower authorities and instructed the original authority to determine the correct value under Customs Valuation Rules after providing the appellant with a hearing opportunity. The appellant was permitted to clear the goods by paying the necessary duty, rejecting the earlier estimated value of Rs. 5 lakhs and accepting the declared value of HK $2500.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal by way of remand for correct valuation and customs duty payment.