2019 (12) TMI 19 - AT - Customs

Levy of penalty - mis-declaration made by the exporter - goods remained as unclaimed for almost two years - Confiscation - imposition of redemption fine and penalty - mis-declaration of imported goods - goods lying abandoned in customs custody - appellant submitted that owing to mis-declaration made by the exporter, appellant had neither released the import documents from the bank upon payment nor filed bills of entry for release of goods but penalty has been imposed on it - HELD THAT - After alert was issued by the CIU on 03.11.2008, the goods in question was lying abandoned in the Customs custody up to 18th June, 2010 till the request for amendment was made by the Shipping Line. Except the statement of the proprietor of the appellant firm and Managing Director of the intended importer M/s Diamond Mink Blankets Ltd. recorded under Section 108 of the Customs Act, other documentary evidence on record is available to substantiate that appellant was earlier engaged in mis-declaration or undervalued imported goods and not a single reference like bill of entry number is made to that effect that would provide any detail concerning involvement of appellant in previous occasions. It appears to be a self-exculpatory statement given under Section 108 of the Customs Act, but no materials evidence on record has been placed by the respondent-department that would substantiate involvement of the appellant firm in the alleged transaction except that of the reply of the appellant regarding his source of acquirement of knowledge of discrepancy in the item supplied to the appellant firm - However, suspicion however strong cannot take the place of proof to established guilt of the appellant. Penalty - HELD THAT - The ground taken in the Order-in-Original and Order-in-Appeal with reference to sub-Section (iii) of Section 30 of the Customs Act, 1962 is of no use to impose penalty on the appellant in view of the fact that import manifest or import report, even if considered as incorrect and done with fraudulent intention since was not established to have been done by the appellant, amendment may only be refused on that ground that would have bearing on the exporter or the intended purchaser and not on the appellant - penalty set aside. The penalty imposed on the appellant is unsustainable and the same is required to be set aside - Since appellant had not placed any claim over the imported goods, no finding is required to be given on the confiscation order and its redemption upon payment of fine at this stage which is not under challenge in the forum by the claimants - appeal allowed in part.

Summary

Issues:
- Imposition of redemption fine and penalty under Customs Act, 1962 challenged in appeal
- Mis-declaration of goods leading to confiscation and penalty
- Applicability of bill of lading in determining mis-declaration by importer

Analysis:
1. The appellant challenged the Order-in-Original that imposed a redemption fine and penalty under Sections 111(f) and 112(a) of the Customs Act, 1962. The case involved the filing of IGM No. 20705/2008 for Polyester Filament Yarn Raw White, which was later sought to be amended to Nylon Viscose Blended Yarn. The Central Intelligence Unit issued an Alert Circular suspecting undervaluation and mis-declaration by importers, including the appellant. Subsequent investigations led to the imposition of a redemption fine and penalty on the appellant, which was upheld by the Commissioner (Appeals) and challenged in the Tribunal.

2. During the appeal, the appellant's counsel argued that the penalty was premature as the cause of action should have arisen after filing bills of entry for clearance. Citing judicial decisions, the counsel contended that a bill of lading is not a substitute for a bill of entry to establish mis-declaration. The appellant claimed innocence based on the mis-declaration by the exporter and previous judicial precedents supporting their position.

3. The Authorized Representative for the respondent supported the penalty, highlighting the unclaimed status of the consignment for 18 months post the Alert Circular and the appellant's history of misdeclaration during the clearance of imported fabrics. The respondent argued that the Commissioner (Appeals) decision was rational and required no interference.

4. Upon reviewing the case record, the Tribunal observed that no concrete evidence linked the appellant to previous mis-declarations, except for a self-exculpatory statement. The lack of material evidence supporting the appellant's involvement in the alleged transaction raised doubts. The Tribunal noted that suspicion, no matter how strong, cannot replace proof to establish guilt. Additionally, the grounds for imposing the penalty were found to be insufficient as they did not directly implicate the appellant.

5. Considering the legal position and lack of substantial evidence against the appellant, the Tribunal ruled that the penalty imposed was unsustainable and set it aside. As the appellant had not claimed the imported goods, no decision was made on the confiscation order and its redemption. The appeal was partly allowed, setting aside the penalty imposed on the appellant.

In conclusion, the Tribunal's decision provided relief to the appellant by overturning the penalty imposed under the Customs Act, 1962, based on the lack of concrete evidence linking them to the alleged mis-declaration and emphasizing the importance of proof over suspicion in establishing guilt.