2024 (12) TMI 17 - AT - Customs

Duty Drawback - Mis-declaration of export goods - adjudicating authority confiscated the said exported goods for their mis-declaration and gave option to redeem the same on payment of redemption fine u/s 125 of Customs Act, 1962 and imposed penalty u/s 114(iii) of the Customs Act, 1962 - HELD THAT - This is a case of drawback where the allegation is that the goods exported merited classification under CTH 6200 2000 and 6005 2000 as against CTH 6205 9090 and 62059090 as declared by the appellant, which meant that the appellant was actually entitled to drawback of Rs1,19,224/- as against Rs.1,39,618.79 claimed by them, thus resulting in an excess claim of Rs 20,394/-. The order is totally non-speaking while it imposes severe fine and penalties for an excess drawback claim of Rs 20,394/. The least the Authority could do is to disclose his mind on the severity of the matter. Circular issued a little before the OIO was passed totally missed the attention of the Ld. Original Authority. The order after accepting that the error was typographical in nature, gives a miss to the principle of proportionality while evoking the penal provisions. Moreso in a case where no SCN was issued or hearing granted as per the request of the appellant. Such waiver of rights is not uncommon where the exporter finds speed of essence and does not want to lose time and money on demurrage etc, in the delay that a formal adjudication process involves. Hence the decision is shocking to the conscience, being wholly out of proportion to the misconduct caused by a typographical error and merits to be set aside for lacking both fairness and transparency. Commissioner Appeals who could have remedied the defect, only recorded that the goods were available for confiscation at the time of passing the OIO and hence the confiscation of goods and imposition was sustainable. The amount of excess drawback involved was only Rs 20,394/- and that the order of the Original Authority was issued where in manifest non application of mind is evident, the order merits to be set aside. Justice will not be served by remanding this low tax matter back to the Ld. Original Authority, for a decision afresh, after a decade.

Summary

Issues: Mis-declaration of export goods, Confiscation of goods, Penalty imposition, Non-speaking order

Mis-declaration of export goods:
The appellant exported goods declared as polyester-cotton blend hooded shirts but were found to be 100% cotton. The appellant claimed a duty drawback based on the declared composition, resulting in an excess claim. The Customs authorities classified the goods differently, leading to a lower duty drawback entitlement. The appellant argued that there was no discrepancy in quantity and that the goods were allowed for export with the correct drawback entitlement. They contended that the mis-declaration was a typographical error, and the confiscation of goods under Section 113 of the Customs Act, 1962 was unjustified. The appellant also cited a precedent to support their case. The Tribunal found that the appellant's misclassification led to an excess claim of duty drawback, justifying penal action under Section 114A of the Customs Act, 1962.

Confiscation of goods:
The adjudicating authority confiscated the goods for mis-declaration and offered redemption on payment of a fine. The appellant argued that since the goods were allowed for export without seizure, confiscation was improper as per the Customs Act. They contended that the imposition of a redemption fine when the goods were already exported was illegal. The Tribunal noted that the absence of a seizure before confiscation and the lack of detailed findings justifying confiscation rendered the orders unsustainable. The appellant's plea to set aside the confiscation and redemption fine was supported by the argument that there was nothing to redeem once the goods were exported.

Penalty imposition:
The penalty was imposed on the appellant for misdeclaration leading to an excess duty drawback claim. The appellant claimed that the penalty was unwarranted as the error was unintentional and did not result in a significant revenue loss. They argued that the penalty should not be imposed if the misdeclaration was not intentional, citing a relevant judicial precedent. The Tribunal found that the penalty under Section 114 of the Customs Act, 1962 could be imposed for misdeclaration, even if unintentional, as it contravened the provisions of the Act. However, the Tribunal noted that the penalty imposed was disproportionate to the offense, especially considering the small amount involved. The Tribunal set aside the penalty, considering the circumstances and lack of a proper reasoned order justifying the penalty.

Non-speaking order:
The Tribunal criticized the original order for being non-speaking and lacking clarity on the severity of the offense. The order was deemed to be disproportionate, especially since the error was acknowledged as typographical. The Tribunal referred to a circular emphasizing the need for adjudication orders to be speaking, containing clear findings and reasoning. The Tribunal found that the penalty imposed was unjust considering the circumstances and the lack of a formal adjudication process. The Tribunal set aside the penalty and fine, emphasizing fairness and transparency in the adjudication process. The appeal was disposed of in favor of the appellant, granting consequential relief as per law.