1989 (6) TMI 210 - AT - Customs

Summary

Issues Involved:
1. Imposition of penalty under Section 114 and Section 117 of the Customs Act.
2. Mis-declaration of goods in the Shipping Bill.
3. Loss and subsequent filing of a new Shipping Bill.
4. Compliance with DEEC Scheme.
5. Procedural lapses and evidentiary issues by Customs Department.
6. Justification of penalty imposition.

Detailed Analysis:

1. Imposition of penalty under Section 114 and Section 117 of the Customs Act:
The appellants challenged the order imposing a penalty of Rs. 50,000/- under Section 114 and Rs. 1,000/- under Section 117 of the Customs Act. The Additional Collector of Customs had imposed these penalties based on the alleged mis-declaration of goods in the Shipping Bill.

2. Mis-declaration of goods in the Shipping Bill:
The appellants, manufacturers, and exporters of readymade garments, had submitted a Shipping Bill (S/B) No. 11001 dated 8-3-1985, describing the goods as "Cotton Powerloom Baby Cord Readymade Ladies blouses, skirts and dress." Upon examination by Customs Officers, the goods were found to be of fabric other than "Baby Cord." The appellants contended that the term "Baby Cord" was included by mistake and was corrected in a duplicate Shipping Bill No. 25789 dated 14-3-1985.

3. Loss and subsequent filing of a new Shipping Bill:
The appellants claimed that the original Shipping Bill was lost en route to the airport, and an FIR was lodged. They filed a duplicate Shipping Bill with the corrected description. Customs officials found this suspicious, especially since the consignment was checked on the same day the loss was reported.

4. Compliance with DEEC Scheme:
The appellants had imported Baby Cord textile under the DEEC Scheme and were obligated to export garments made from this fabric. Customs officials suspected the appellants were trying to claim DEEC benefits for the consignment by mis-declaring the goods. However, the appellants argued that the impugned Shipping Bill did not have the necessary endorsements to claim DEEC benefits, and they had no intention of doing so.

5. Procedural lapses and evidentiary issues by Customs Department:
The Customs Department failed to produce the register bearing entries of the Shipping Bill, which was crucial for verifying the appellants' claims. The Additional Collector acknowledged that the impugned Shipping Bill lacked the endorsements required under the DEEC Scheme but still rejected the appellants' arguments. The appellants produced seven other Shipping Bills and relevant documents to support their claim of a clerical error.

6. Justification of penalty imposition:
The Additional Collector concluded that there was a mis-declaration and imposed penalties. However, the tribunal found that the Customs Department did not provide sufficient evidence to prove the appellants' mala fide intent. The tribunal noted that suspicion, however grave, cannot replace proof. The appellants' explanation of a clerical error was supported by other documents, and the Customs Department's failure to produce vital evidence weakened their case.

Conclusion:
The tribunal found the imposition of penalties to be harsh, unjustified, and unreasonable. The appellants' contention of a clerical error was accepted, and the penalties were set aside. The appeal was allowed, and the appellants were entitled to a refund of the penalty paid, to be refunded within three months from the receipt of the order.