2021 (5) TMI 909 - AT - Customs

Rectification of Mistake - waiver of penalty under Section 114AA of the Customs Act - reduction of penalty under Section 112 (a) of the Customs Act - HELD THAT - The scope of an application under Rules 41 for Rectification of Mistakes is only to rectify any mistake apparent on record and not to review any decision already taken even, if any party feels that the decision is not correct. The aggrieved party can take recourse to appellate remedies if it is not satisfied with the Final Order. The first alleged mistake pointed out by the applicant is that in paragraph 5 of the Final Order, it has been recorded that all the ETAs submitted were fake, while, in fact, as recorded in paragraph 6 of the impugned order in original passed by the Learned Commissioner, only two ETAs were fake and the rest 14 ETAs were issued by DOT but were held to be invalid in the OIO because they were meant for Fitbits manufactured in USA while the Fitbits which were imported were manufactured in China - As clarified in paragraph 2(ii) of the Minutes of the meeting held by Chief Commissioner on 24-11-2016 a copy of which was enclosed as Annexure 20 to the Appeal, the ETAs are valid even if they are of a different country of origin. The two fake ETAs accounted for goods worth ₹ 1,26,69,14/- while the remaining 14 FTAs accounted for goods worth ₹ 1,39,45,581/-. We find that this mistake needs to be rectified in the Final Order. The second alleged mistake is that they had obtained fresh ETAs in lieu of the fake ones which they had initially submitted, therefore, the goods imported were not liable for confiscation. We find that this submission was made and was recorded in paragraph 3 and the decision was recorded in paragraph 7 of the Final order - this submission was considered and in the Final Order, the appellant was still considered liable to penalty. There is no error apparent on record. The third submission is that there is no prohibition on import of wireless devices which was not considered by Tribunal in the Final Order - in paragraph 3 of the Final Order, the argument of the appellant that the goods were not liable for confiscation as they were not imported contrary to any prohibition under the Customs Act or any other law for the time being in force was recorded and the submissions by the DR were recorded in paragraph 4 - In the present case, the entire case is built upon this National Treatment under paragraph 2.03. Therefore, we find no force in the argument of the applicant that their import was not in violation of any law and hence the imported goods were not liable for confiscation nor were they liable to penalty. Penalty imposed on the applicant under Section 112 (a) (ii) of the Customs Act, 1962 - HELD THAT - The argument of the learned Counsel that the penalty cannot be more than the duty sought to be evaded under Section 112(a)(ii) is untenable since there was neither any allegation of attempt to evade payment of duty by the department nor any arguments were made on this point. We therefore, find that there is no force in this argument. The quantum of penalty, however, needs to be reconsidered, since 14 of the 16 ETAs were genuine with only wrong Country of Origin, which, according to the final clarification of the DOT does not matter and the ETAs are valid. The application for rectification of mistake is disposed off.

Summary

Issues Involved:
1. Validity of Equipment Type Approvals (ETAs).
2. Submission of genuine ETAs in lieu of fake ones.
3. Prohibition on import of wireless devices.
4. Imposition and quantum of penalty under Section 112 (a) (ii) of the Customs Act, 1962.

Detailed Analysis:

1. Validity of Equipment Type Approvals (ETAs):
The appellant argued that only two out of sixteen ETAs were fake, and the remaining fourteen were genuine but issued for goods manufactured by Fitbit USA, while the imported goods were from Fitbit China. The Commissioner of Customs had held these fourteen ETAs invalid based on the country of origin. However, a subsequent clarification from the Department of Telecommunications (DoT) indicated that ETAs are valid irrespective of the country of origin if the goods meet the specified technical standards. The Tribunal acknowledged this clarification and rectified the Final Order to reflect that the fourteen ETAs were valid, thus the goods imported under these ETAs were not liable for confiscation.

2. Submission of genuine ETAs in lieu of fake ones:
The appellant submitted that they had obtained fresh ETAs to replace the fake ones. The Tribunal noted that this argument was considered in the Final Order, which held the appellant liable for penalty despite the submission of genuine ETAs later. The Tribunal found no error apparent on record regarding this issue and upheld the decision that the appellant could not escape liability for the initial submission of fake ETAs.

3. Prohibition on import of wireless devices:
The appellant contended that there was no prohibition on the import of wireless devices as per the ITC (HS) Classification and the relevant notification under the Indian Telegraph Act, 1885, and Indian Wireless Telegraphy Act, 1933. The Tribunal noted that compliance with domestic laws, including the requirement of valid ETAs, is mandated by paragraph 2.03 of the Foreign Trade Policy 2015-20. The Tribunal concluded that the import of goods without valid ETAs was in violation of this policy, making the goods liable for confiscation under Section 111(d) of the Customs Act.

4. Imposition and quantum of penalty under Section 112 (a) (ii) of the Customs Act, 1962:
The appellant argued that the penalty under Section 112 (a) (ii) should not exceed 10% of the duty sought to be evaded or ?5,000, whichever is higher. The Tribunal clarified that the penalty was imposed under Section 112 (a) (i) for violation of import regulations, not for evasion of duty. The Tribunal found that the penalty should be reconsidered since the majority of the ETAs were valid. Consequently, the penalty was reduced to ?4,50,000.

Conclusion:
The Tribunal modified the Final Order to acknowledge the validity of the fourteen ETAs and reduced the penalty imposed on the appellant. The application for rectification of mistake was disposed of with the appellant entitled to consequential reliefs.