2015 (7) TMI 925 - AT - Customs

Penalty under Section 112(a) of the Customs Act, 1962 - Evasion of duty - Undervaluation of goods - Held that - from a plain reading of provisions of sub-section (n) and (o), it is clear that these provisions are not applicable to the case. In fact Section 111(n) deals with transit/transhipment of goods. Section 111(o) deals with a situation where certain claim is claimed subject to some condition and subsequently the said condition is not followed. In the present case, it is not a situation. In fact, the impugned goods were never cleared from Customs therefore claiming exemption does not arise. Consequently, the provisions of Section 111(n) and (o) are not applicable to the facts of this case. - Any Bill of Entry was yet to be filed by the appellants to clear the subject import. The first occasion for an importer to declare or misdeclare particulars of the goods imported by him is at the stage of filing Bill of Entry. He cannot be held liable for any misstatement of particulars in Bill of Lading or Import manifest. Hence, as rightly contended by the appellants, the finding of misdeclaration against them is untenable. In this case, the investigating agency (DRI) also ventured into an inquiry as to what should be the assessable value of the goods and as to whether the importer had misdeclared the value of the goods. The importer never filed any Bill of Entry declaring the value and other particulars of the goods. Hence it is absurd for the DRI to have ventured to such an exercise. Surprisingly, this absurdity was sustained by learned Commissioner in the impugned order. As the appellant has not filed any Bill of Entry neither placed order for supply of the impugned goods to the supplier/exporter, the penalty under Section 112(a) of the Customs Act is not imposable on the appellant. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Imposition of penalty under Section 112(a) of the Customs Act, 1962.
2. Applicability of Sections 111(d), (m), (n), and (o) of the Customs Act, 1962 for confiscation of goods.
3. Ownership and responsibility for the imported goods.
4. Relevance of case laws cited by the appellant.

Detailed Analysis:

1. Imposition of Penalty under Section 112(a) of the Customs Act, 1962:
The appellant contested the imposition of a Rs. 20 lakh penalty under Section 112(a) of the Customs Act, 1962. The appellant argued that they had not filed any Bill of Entry for the imported plastic scrap and were not the owners of the said goods. The appellant claimed no act of omission or commission on their part to warrant the penalty. The Tribunal noted that the appellant had not filed any Bill of Entry and had not placed any order for the goods. The Tribunal found that the Revenue had not made any effort to verify whether the appellant had placed an order with the supplier. Consequently, the Tribunal concluded that the penalty under Section 112(a) was not imposable as the appellant was not involved in any act rendering the goods liable for confiscation.

2. Applicability of Sections 111(d), (m), (n), and (o) of the Customs Act, 1962 for Confiscation of Goods:
The Tribunal examined the applicability of Sections 111(d), (m), (n), and (o) for the confiscation of goods. Section 111(d) pertains to goods imported contrary to any prohibition. Section 111(m) deals with goods that do not correspond to the entry made under the Act. Section 111(n) concerns the transit/transshipment of goods, and Section 111(o) relates to goods exempted from duty under certain conditions. The Tribunal found that Sections 111(n) and (o) were not applicable as the goods were never cleared from Customs and no exemption was claimed. Section 111(m) was also not applicable as no Bill of Entry was filed by the appellant. The only applicable provision was Section 111(d), but the Tribunal found no evidence of the appellant's involvement in importing the goods contrary to any prohibition.

3. Ownership and Responsibility for the Imported Goods:
The appellant argued that they were not the owners of the imported goods and had not placed any order for them. The Tribunal noted that the appellant had informed their bankers that the goods were not shipped as per their purchase order and had issued a No Objection Certificate (NOC) to the exporter. The supplier had sought re-export of the goods, confirming that the appellant had not ordered the goods. The Tribunal found that the Revenue had not provided any evidence to show that the appellant had ordered the goods. Therefore, the Tribunal concluded that the appellant was not responsible for the imported goods.

4. Relevance of Case Laws Cited by the Appellant:
The appellant cited several case laws to support their contention that the penalty was not imposable. The Tribunal referred to the decisions in CCE, Goa Vs. Kabul Textiles (LLC), Arya International Vs. CC, Kandla, and Rayal Impex Vs. CC, Chennai, which held that penalty is not imposable if no Bill of Entry is filed and there is no evidence of the appellant's involvement in the importation. The Tribunal also referred to the decision in Amba Woolen Mills CCE, Bombay, which held that penalty is not imposable if the importer is not involved in any act rendering the goods liable for confiscation. The Tribunal found that these case laws were relevant and supported the appellant's contention.

Conclusion:
The Tribunal concluded that the penalty under Section 112(a) of the Customs Act, 1962 was not imposable on the appellant as they had not filed any Bill of Entry, had not placed any order for the goods, and were not involved in any act rendering the goods liable for confiscation. The Tribunal set aside the impugned order and allowed the appeal with consequential relief.