2025 (3) TMI 635 - AT - Customs

Mis-declaration of quantity of imported goods - rejection of declared value - redetrmination of value - recovery of differential duty with interest and penalty - Confiscation - penalties. Mis-declaration of quantity and non declaration of goods - HELD THAT - The appellant has failed to produce any evidence to show that the goods loaded in excess were due to mistake of the supplier. The letter dated 22.03.2014 issued by the supplier accepting their mistake cannot absolve the appellant from the mis-declaration and excess quantity of goods found on examination - the goods found to be in excess are liable for confiscation. However from the impugned order it is observed that confiscation has been ordered even in respect of the quantity of goods declared in the Bills of Entry which is not correct. Thus the goods found in excess and the undeclared goods alone are liable for confiscation. Accordingly the confiscation of the goods found to be in excess than the declared quantities in the bills of Entry and the non declared goods upheld and the confiscation of the goods declared in the bills of entry set aside. Confiscation of the goods on account of mis-declaration of value - HELD THAT - The ld. adjudicating authority has admitted that the value of identical goods were not available and therefore the he has adopted the value of similar goods in contemporaneous imports. However it is observed that no documentary evidence such as copies of invoices Bills of Entry and relevant invoices were supplied to the appellants in support of the higher value of contemporaneous imports of similar goods cited by the Revenue. It is the settled position of law that transaction value cannot be rejected on the basis of assumptions and presumptions. There should be cogent evidence for contemporaneous imports to substantiate the rejection of transaction value. Rule 3(2) of the Customs Valuation Rules mandates that if the transaction value is to be rejected there must be evidence available on record to justify the same. However it is seen that there is no allegation of extra payment made by the appellant over and above the transaction value declared in the invoices. Thus the transaction value declared by the appellant cannot be rejected in the absence of any allegation of extra payment thereof. The differential duty demanded on account of enhancement of value is not sustainable. Therefore the transaction value declared by the appellant is found to be acceptable and the value declared in the invoices is to be adopted for the purpose of determination of Customs Duty payable by the importer. Thus the confiscation of the impugned goods on account of mis-declaration in value is not warranted. Penalty imposed on the appellant importer - HELD THAT - It is observed that penalty equal to the differential customs duty which is confirmed on account of mis declaration in quantity/ non declaration if at all is liable to be imposed under section 112(a) of the Customs Act 1962. However it is observed that the said section has not been invoked in the impugned order and hence penalty under Section 112(a) of the Act is not imposable in this case. Penalties imposed on the appellant-company and its Director under Sections 114A of the Customs Act - HELD THAT - Section 114A provides imposition of mandatory penalty on the person who is liable to pay the duty and in this case the importing company is liable to pay duty. Hence penalty equal to the differential customs duty which is confirmed on account of mis declaration in quantity/ non declaration is liable to be imposed on the appellant-company under section 114A of the Customs Act 1962. Even though the appellant-company has claimed that the mis-declaration has occurred on account of the mistake of the supplier the contention of the appellant cannot be agreed upon in the absence of any evidence in support of their claims - the appellant-company is liable to be penalized for mis-declaration of the goods under Section 114A. However such penalty should commensurate with the quantity mis-declared only. Penalty imposed on the Director of the appellant company under Section 114A ibid. - HELD THAT - The penalty under section 114A is not imposable on the Director of the appellant company. Penalty can be imposed on the Director of an importing company under Section 112(a) of the Customs Act 1962 only on the charge of abatement of commission / omission of some act which would render the imported goods liable to confiscation under Section 111 of the Customs Act 1962. However since there was no proposal for imposing penalty on him under Section 112(a) in the show cause notice we observe that penalty under Section 112(a) is not imposable on the Director. Penalties imposed on both the appellants under Section 114AA - HELD THAT - The said section is applicable when there is no existence of goods but the documents are filed fraudulently. In this case the supplier has agreed that the documents issued by him are genuine Accordingly Section 114AA of the Customs Act 1962 cannot be invoked in the instant case to impose penalty either on the appellant importer or on the Director of the appellant importer. Consequently no penalties are imposable on the appellants under Section 114AA ibid. in the facts and circumstances of the case. Conclusion - i) The confiscation of the goods found to be in excess than the declared quantities in the bills of Entry and the non-declared goods upheld. The confiscation of the goods declared in the bills of entry set aside. ii) The differential duty demanded on account of enhancement of value is not sustainable. Thus the confiscation of the impugned goods on account of mis-declaration in value is not warranted. iii) The transaction value declared by the appellant is found to be acceptable and the value declared in the invoices is to be adopted for the purpose of determination of Customs Duty payable by the importer. iv) The appellant-company is liable to be penalized for an amount equal to the duty confirmed at Sl. No. (iii) supra under Section 114A of the Customs Act 1962. No penalty is imposable on the appellant-importer under section 114AA of the Customs Act. v) Penalties under section 114A and 114AA ibid. are not imposable on the Director of the appellant company. vi) Redemption fine is liable to be imposed in consonance with the excess quantity found. The matter remanded to the adjudicating authority for recalculating the duty payable in respect of the excess quantity of goods found on the declared goods and the non-declared goods and the quantum of redemption fine imposable in consonance with the same. The amount of Rs.7, 20, 695/- already deposited by the appellant is to be adjusted against the duty demand confirmed. Appeal disposed off by way of remand.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the goods imported by the appellant were correctly declared in terms of quantity and value in the Bills of Entry.
• Whether the confiscation of goods and imposition of penalties under Sections 111(i), 111(l), 111(m), 114A, and 114AA of the Customs Act, 1962, were justified.
• Whether the transaction value declared by the appellant should be accepted or rejected under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
• Whether penalties imposed on the appellant company and its director were legally sustainable.

ISSUE-WISE DETAILED ANALYSIS

Mis-declaration of Quantity and Confiscation of Goods

The relevant legal framework involves Sections 111(i), 111(l), and 111(m) of the Customs Act, 1962, which permit confiscation of goods on grounds of mis-declaration. The Court found that the goods were indeed in excess of the declared quantities. The appellant's defense that the excess was due to the supplier's mistake was not accepted, as no substantial evidence was provided to support this claim. Consequently, the Court upheld the confiscation of goods found in excess and those not declared, but set aside the confiscation of goods that were correctly declared.

Valuation of Goods and Transaction Value

The Customs Valuation Rules, 2007, particularly Rule 3(2), mandates acceptance of transaction value unless there is evidence to the contrary. The adjudicating authority had rejected the transaction value based on the value of similar goods in contemporaneous imports. However, the Court noted that no documentary evidence was provided to substantiate these higher values. Citing precedents, the Court emphasized the need for cogent evidence to reject transaction values. Consequently, the Court found the transaction value declared by the appellant acceptable and held that the differential duty demanded on account of value enhancement was not sustainable.

Penalties Imposed under Sections 114A and 114AA

Section 114A imposes penalties for non-levy or short-levy of duty due to willful misstatement or suppression of facts. The Court found that the appellant company was liable for penalties under Section 114A due to mis-declaration of quantity. However, the penalties imposed on the director were not justified as there were no specific allegations or roles attributed to him in the show cause notice. The Court also held that Section 114AA, which applies to fraudulent documentation, was not applicable as the goods were physically imported and the documents were genuine.

SIGNIFICANT HOLDINGS

• The Court upheld the confiscation of excess and undeclared goods but set aside the confiscation of correctly declared goods.
• The transaction value declared by the appellant was accepted as no substantial evidence was provided to justify its rejection.
• Penalties under Section 114A were upheld for the appellant company concerning mis-declaration of quantity, but not for the director due to lack of specific allegations.
• No penalties were imposed under Section 114AA, as the section was deemed inapplicable.
• The matter was remanded to the adjudicating authority for recalculating duty and redemption fine based on excess and undeclared goods.