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2013 (8) TMI 652 - AT - CustomsNon-declaration of Goods Penalty on the master of the vessel on account of non-declaration of 700 MT of cement, two Dozer Caterpillar and one motor bike in the IGM - Difference of opinion - majority order - Held that - Non-declaration was not on account of any mala fide on the part of the captain - To err is human and as such mistake on the part of the captain can be on account mis-understanding of law and be of procedural nature without any intention to evade duty bona fide and inadvertent mistake should not be met with imposition of penalty which had inherent built of mala fide relying upon ESSAR OIL LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI 2002 (2) TMI 542 - CEGAT, MUMBAI . In the absence of any mala fide imposition of penalty on steamer agent u/s 112 was not called for - It was trite law that for attracting penalty knowledge of the offended had to be brought out - the captain could be under a bona fide belief that the above items being part and parcel of the vessel on account of the Board s Circular were not required to be declared separately - such items were already a part of MOA and could not had escaped the attention of the AO Penalty set aside Decided in favor of assesse. Dissenting Judgement - Member (Technical) was not in consonance with the opinion of the Member (Judicial) He delivered separate Judgement as to against the assesse the Third Member was into the favor of assesse.
Issues Involved:
1. Imposition of penalty for non-declaration of goods in the Import General Manifest (IGM). 2. Whether specific items (cement, dozer caterpillars, motorbike) were required to be declared in the IGM. 3. Determination of mala fide intent or bona fide mistake in non-declaration. 4. Applicability of penalty under Section 112 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Imposition of Penalty for Non-declaration of Goods in the IGM: The primary issue in this case revolves around the imposition of a penalty of Rs. 50,000/- on the master of the vessel for failing to declare 700 MT of cement, two dozer caterpillars, and one motorbike in the IGM. The adjudicating authority acknowledged that the cement was hardened and considered rubbish, which might have led the captain to believe it did not need to be declared. The Tribunal noted that the non-declaration of the cement was due to a bona fide belief. 2. Whether Specific Items Were Required to be Declared in the IGM: The appellant contended that the non-declaration of the dozer caterpillars and motorbike was not mala fide since these items were part of the annexure to the Memorandum of Agreement (MOA) submitted to customs. The Tribunal observed that the dozer caterpillars were part of the vessel's equipment and classified under heading 89.08 as per Circular No. 37/96. The motorbike, being old and out of order, was considered insignificant with a value of Rs. 5,050/-. The Tribunal concluded that the non-declaration was a bona fide procedural mistake without any intent to evade duty. 3. Determination of Mala Fide Intent or Bona Fide Mistake in Non-declaration: The Tribunal emphasized that for a penalty to be imposed, mala fide intent must be established. The Tribunal found no conscious effort by the captain to hide the facts from customs, as the items were already part of the MOA and on record. The Tribunal cited the case of M/s. Essar Oil Ltd., where it was held that in the absence of mala fide intent, penalty under Section 112 of the Customs Act was not warranted. The Tribunal concluded that the non-declaration was due to a misunderstanding of the law and was a procedural error without any intention to evade duty. 4. Applicability of Penalty under Section 112 of the Customs Act, 1962: The Tribunal noted that Section 112 of the Customs Act requires knowledge of the offense for a penalty to be imposed. The Tribunal found that the captain's belief that the items were part of the vessel and not required to be declared separately was bona fide. Consequently, the Tribunal set aside the penalty of Rs. 50,000/- and allowed the appeal with consequential relief. Separate Judgment by Member (Technical): Member (Technical) disagreed with the order to set aside the penalty, arguing that the master of the vessel is required to file a correct IGM under Section 30 of the Customs Act, 1962. The Member (Technical) noted that the omission of items in the IGM is sufficient for penalty under Section 112(a) without requiring intent or mala fide. However, considering the lenient view already taken by the Commissioner, the penalty was reduced to Rs. 10,000/-. Resolution of Difference of Opinion: The matter was referred to a third Member due to the difference of opinion between Member (Judicial) and Member (Technical). The third Member (Judicial) concluded that the items were declared in the Cargo declaration and Ship's Store declaration, which were acknowledged by customs. Therefore, there was no basis for confiscation under Section 111(f) or penalty under Section 112 of the Customs Act. The third Member agreed with Member (Judicial) that the penalty should be set aside. Final Order: In view of the majority order, the penalty of Rs. 50,000/- was set aside, and the appeal was allowed with consequential relief.
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