2017 (4) TMI 371 - AT - Customs

Export of rice - mis-declaration - All exporters had claimed that they were exporting Basmati Rice, Revenue had claimed that the rice being exported by them is not Basmati Rice - N/N. 67 dated 23.01.2003 - confiscation - penalty u/s 114 (i) - Held that - in the schedule to the said notification also prescribes that the proportion of non-Basmati Rice in the export consignment should not exceed 15%. The Test Report obtained from the testing agencies clearly shows that the proportion of non-Basmati Rice in the export consignment was in excess of 20% and was found to be upto 90%. Thus, the prohibition in terms of N/N. 67 dated 23.01.2003 clearly applies to all these consignments - the proportion of non-Basmati Rice found in the samples exceeded 20%. The goods were exported against test bond and therefore the liability of confiscation and penalty u/s 114 (i) arises. Penalty u/s 114 AA - Held that - the exporters have deliberately misdeclared the product to avoid the prohibition under the policy. However, it is seen that the non-Basmati Rice found in the exporter varied from 23% to 90.2% - penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Confiscation and imposition of penalties for exporting non-Basmati Rice.
2. Appeals against waiver of confiscation, inadequate penalty, or non-imposition of fines.
3. Specific appeals by individuals and entities against penalties.
4. Application and interpretation of Section 114(i) and Section 114AA of the Customs Act, 1962.
5. Compliance with DGFT notifications and Basmati Rice export standards.
6. Role and penalties for Customs Brokers.

Detailed Analysis:

1. Confiscation and Penalties for Exporting Non-Basmati Rice:
The exporters claimed they were exporting Basmati Rice, but testing by the Basmati Export Development Foundation revealed the rice did not meet the specifications for Basmati Rice as prescribed by the DGFT. Consequently, the exported material was held liable for confiscation, and penalties under Section 114(i) and Section 114AA of the Customs Act, 1962, were imposed.

2. Appeals Against Waiver of Confiscation, Inadequate Penalty, or Non-Imposition of Fines:
Several appeals were filed by Revenue against the orders of the Commissioner for waiving confiscation, imposing inadequate penalties, or not imposing fines. Specific appeals by individuals and entities involved in exporting non-Basmati Rice also sought relief against penalties imposed on them.

3. Specific Appeals by Individuals and Entities:
- Appeals were filed by various exporters and individuals, including M/s Balgopal Shipping & Logistics, Shri Bharat Umraniya, Shri Sunil Bhatia, and Kunal Travels, against the imposition of penalties.
- Revenue sought to increase penalties on several individuals and entities, arguing that the penalties imposed were meager compared to the maximum penalties permissible under Section 114(i) and 114AA.

4. Application and Interpretation of Section 114(i) and Section 114AA:
- Penalties under Section 114(i) were upheld based on the findings that the exported rice did not conform to Basmati Rice standards.
- Section 114AA was invoked for penalties related to false declarations and misstatements. The Tribunal found that the scope of Section 114AA is wide and applicable to cases where false declarations were made knowingly.

5. Compliance with DGFT Notifications and Basmati Rice Export Standards:
- The Tribunal referred to the Hon’ble High Court of Delhi's decision in Commissioner of Customs vs. Orion Enterprises, which clarified that the export of non-Basmati Rice is prohibited if it exceeds the permissible limit of 20% of other rice.
- The exporters argued that the DGFT notifications did not specify the 20% limit, but the Tribunal upheld the confiscation and penalties based on the notifications and test reports.

6. Role and Penalties for Customs Brokers:
- Penalties were imposed on Customs Brokers, including M/s Kunal Travels, for their role in facilitating the export of non-Basmati Rice. The Tribunal found that the brokers were aware of the misdeclaration and upheld the penalties under Section 114(i) and 114AA.

Conclusion:
- The Tribunal upheld the confiscation and penalties imposed on the exporters for misdeclaring non-Basmati Rice as Basmati Rice.
- Appeals by Revenue for enhancement of penalties were allowed by way of remand to the Adjudicating Authority for reconsideration.
- Appeals by certain individuals and entities against penalties were dismissed, while others were remanded for further examination.
- The Tribunal emphasized the importance of adhering to DGFT notifications and Basmati Rice export standards to prevent misdeclaration and ensure compliance with export regulations.