MISDELARATION OF IMPORTED GOODS - MOBILE ACCESSORIES DECLARED AS ASSORTED CHAPPELS

[Mr. M. GOVINDARAJAN]

Section 46(4) an Section 50(2) of the Customs Act, 1962 (‘Act’ for short) requires an importer or exporter when they file the bill of entry or shipping bill required to subscribe to a declaration regarding the truth of the contents of the bill of entry or shipping bill as the case may be. If the details so declared to be true are found to be not true, it is ‘mis-declaration’. 

The following are considered as mis-declaration under the Act-

• Wrong declaration of goods description;
• Wrong declaration of the country of origin;
• Wrong declaration of quantity;
• Wrong declaration of weight;
• Wrong declaration of value;
• Wrong declaration of the year of manufacture;
• Claim ineligible notification benefit.

Misdeclarations are being made in the bill of entry for avoiding customs duty or escape from the licensing route, or clearing smuggled or prohibited goods.  Such goods are liable to be confiscated under Section111 of the Act.  Penalties under Section 112(2) and Section 114AA of the Act are also imposable on the exporter/importer.

Penalty under Section 112 (b)

Section 112 (b) of the  Act provides that any person, who acquires possession of or is in any way concerned in carrying, removing, depositing, harboring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, -

(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or Rs.5000/-, whichever is the greater;

(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding 10% of the duty sought to be evaded or Rs.5000/-, whichever is higher.

(iii) where such duty as determined under section 28(8) and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be 25% of the penalty so determined;

(iv) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77  is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or Rs.5000/-, whichever is the greater;

(v) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or Rs.5000/-, whichever is the highest;

 (vi) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or Rs.5000/-, whichever is the highest.

Penalty under Section 114AA

Section 114AA of the Act imposes penalty for use of false and incorrect material.  This section provides that if a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding 5 times the value of goods.

In CARAVEL LOGISTICS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS HYDERABAD - 2023 (10) TMI 361 - CESTAT HYDERABAD , the appellant is a logistic service provider for import and export of goods.  The appellant filed IGM on 31.01.2023 on one consignment imported by Great Overseas.   The goods in the container was declared as assorted chapels.  The Bill of Lading has also contained the goods as assorted chapels.  During April 2023 Great Overseas requested for an amendment in the IGM description and quantity.  The said goods were uncleared.  The consignment was opened for inspection during the month July 2023.  The Authorities found that the imported goods contained mobile spare parts/mobile accessories.   The Authorities valued the consignment at Rs.4.58 crores.  The said consignment was confiscated.  The appellant was given option to redeem the goods on payment of redemption fine Rs.45 lakhs.     Penalty was imposed on the appellant under section 112(b) and under section 114AA of the Customs Act 1962 (‘Act’ for short).  The appellant filed appeal before the CESTAT.

Submissions

The appellant submitted the following before the CESTAT-

• The appellant had an access to the invoice raised by the overseas exporter when the amendment to IGM was sought by them.
• This invoice showed that apart from assorted chappals, some other items were also present in the container.
• This fact was not brought to the specific knowledge of the Customs officials.
• The mobile phones and accessories were only found when the container was opened for inspection.

The Revenue highly objected on the submissions of the appellant and prayed for the dismissal of the appeal.  The CESTAT observed that the appellant has filed IGM in the normal course based on the documents available with him, wherein the description has been mentioned as ‘assorted chappals’.   Subsequently they have got the amendment done only on the basis of instructions received from the proprietor of Great Overseas, Mr M.A. Mujahid which is also confirmed by him in his recorded statements.  The CESTAT inferred that there cannot be ulterior motive on their part to have filed the IGM and the amendment request letter.  The CESTAT, however found that there was a negligence on their part to specifically not to pose any query the importer as to why the description in the invoices is different from the description given earlier in the Bill of Lading.

The CESTAT held that the appellant was negligent and therefore modified the order.  The CESTAT set aside the penalty imposed under Section 112(b) and reduced the penalty imposed under Section 114AA of the Act to Rs.50,000/-.