1991 (9) TMI 179 - AT - Customs

Summary

Issues Involved

1. Confiscation of goods and imposition of fine and penalty under Sections 111(d), 111(m), and 112 of the Customs Act, 1962.
2. Mis-declaration of goods and subsequent examination.
3. Authority of the Deputy Collector to recover additional duty.
4. Validity of visual test versus analytical test for determining the nature of goods.
5. Admission and acceptance of mis-declaration by the appellant.
6. Legal implications of mis-declaration under Section 17 and Section 46 of the Customs Act.
7. Examination and detention of goods by Customs authorities.
8. Proportional reduction of fine and penalty.
9. Accountability of Customs officers involved in the examination and clearance process.

Detailed Analysis

1. Confiscation of Goods and Imposition of Fine and Penalty

The appeal challenges the orders of the Deputy Collector of Customs, Bombay, who ordered the confiscation of 54 bales of synthetic rags valued at Rs. 1,07,146.26 under Sections 111(d) and 111(m) of the Customs Act, 1962, and imposed a fine of Rs. 20,000/- in lieu of confiscation. Additionally, a penalty of Rs. 50,000/- was imposed under Section 112 of the Act. The Collector of Customs (Appeals), Bombay, upheld this order on the grounds that the appellants did not dispute the mis-declaration of goods.

2. Mis-declaration of Goods and Subsequent Examination

The consignment declared as synthetic rags was imported from Germany in August 1985 and cleared under O.G.L. - Appendix 6. Upon clearance, the goods were inspected and certified as woollen rags. However, subsequent examination by the Central Intelligence Unit revealed that over 90% of the goods were synthetic rags. The Managing Director of the appellant firm admitted in his statement that it was a deliberate act to take away synthetic rags instead of woollen rags.

3. Authority of the Deputy Collector to Recover Additional Duty

The appellant contested the Deputy Collector's authority to recover additional duty on the grounds that the goods were allowed to be cleared as woollen rags and were not the subject of dispute. The court found that the Customs Authorities intercepted the goods before they could leave the Port Trust premises, thus the clearance order under Section 47 was not fully executed.

4. Validity of Visual Test Versus Analytical Test

The appellant argued that the Deputy Collector's finding was based on a visual test rather than an analytical test. The court noted that the Managing Director was present during the examination and admitted that the goods were synthetic rags. He did not insist on a chemical test or a cent-percent examination at the time, thereby waiving his right to such procedures.

5. Admission and Acceptance of Mis-declaration by the Appellant

The Managing Director admitted that the goods were synthetic rags and offered to pay the extra duty. He also waived the requirement for a show-cause notice and personal hearing. The court emphasized that reversing this admission would undermine the quasi-judicial process.

6. Legal Implications of Mis-declaration Under Section 17 and Section 46

Section 17(4) of the Customs Act allows for reassessment of duty if subsequent examination reveals discrepancies in the declaration. The appellant's argument that the declaration based on documents is not a mis-declaration was rejected. The court highlighted that the importer has a duty to make a true declaration and could have requested an examination under the proviso to Section 46(1).

7. Examination and Detention of Goods by Customs Authorities

The Customs Authorities detained the goods based on credible information about the mis-declaration. The examination confirmed the information, and the appellant accepted the mis-declaration. The court upheld the actions of the Customs Authorities as consistent with the law.

8. Proportional Reduction of Fine and Penalty

The court found no admission regarding the goods in the third lorry, which was not intercepted. Therefore, it reduced the fine from Rs. 20,000/- to Rs. 10,000/- and the penalty from Rs. 50,000/- to Rs. 25,000/-, giving the benefit of doubt for the unexamined portion of the consignment.

9. Accountability of Customs Officers

The court noted that no action was taken against the officers responsible for the initial examination and clearance of the goods. It directed that a copy of the order be sent to the Collector of Customs, Bombay, for examining and deciding on the appropriate action against the concerned officers.

Conclusion

The appeal was partially allowed with a reduction in the fine and penalty. The court upheld the confiscation and additional duty imposition due to the appellant's admission of mis-declaration and the subsequent examination findings. The court also directed an investigation into the accountability of the Customs officers involved in the initial clearance process.