2022 (3) TMI 825 - AT - Customs

Levy of Redemption Fine and Penalty - Valuation of imported goods - mobile accessories - recovery of undeclared goods such as Shoes (counterfeit), LED lights, Adapters, Power banks, Batteries, Cosmetics - allegation is also that goods were imported infringing the rights of Intellectual Property Right holders and also in violation of Drugs and Cosmetics Act, 1940 and Bureau of Indian Standards - HELD THAT - The goods have already been exported. In para-3 of the OIO, the adjudicating authority has stated that the importer had no knowledge of the presence of undeclared items in the container. He has proceeded to impose penalty observing that even in the absence of mens rea, the penal provisions under Section 112 of the Customs Act, 1962 can be invoked. The Hon ble Apex Court in the case of Siemens India Ltd. 1999 (8) TMI 84 - SUPREME COURT has held that the redemption fine cannot be imposed when the goods are exported - thus, the redemption fine imposed in the present case is unwarranted and the same is set aside. Penalty - HELD THAT - Apart from imposing redemption fine, the adjudicating authority has imposed a penalty of ₹ 4,00,000/- under Section 112 (a) (i) (ii) of Customs Act, 1962. The undeclared goods have come to light after screening of the container by the Department. Taking these facts into consideration, the penalty can be reduced to ₹ 50,000/-. Appeal allowed in part.

Summary

Issues:
1. Assessment of customs duty on imported goods.
2. Confiscation and redemption of undeclared goods.
3. Imposition of redemption fine and penalty.
4. Applicability of legal precedents on redemption fine and penalty.

Assessment of Customs Duty:
The appellant filed a Bill of Entry for imported mobile accessories, self-assessing the value at &8377; 8,93,678.18 with duty of &8377; 3,25,286/-. However, the assessing officer enhanced the assessable value to &8377; 13,53,385.11, leading to a duty liability of &8377; 4,87,597/-. Subsequently, discrepancies were found during scanning, resulting in the discovery of undeclared goods infringing intellectual property rights and violating certain acts. The original authority ordered confiscation of goods, allowing redemption of specific items for reexport upon payment of redemption fine and imposing penalties.

Confiscation and Redemption of Undeclared Goods:
The importer claimed that the undeclared goods were sent erroneously by the supplier and requested for reshipment. The original authority ordered confiscation but allowed redemption and reexport of certain goods while ordering destruction of others. The Commissioner (Appeals) upheld this decision after a hearing, leading to the appellant's appeal challenging the imposition of redemption fine and penalty.

Imposition of Redemption Fine and Penalty:
The appellant argued that they did not intentionally import the undeclared goods, attributing the error to the foreign supplier. They emphasized that the goods sent were not part of their order and presented evidence of the supplier acknowledging the mistake. The appellant accepted the confiscation but contested the redemption fine and penalty, which were based on profit margins. Legal precedents were cited to support the argument that redemption fine cannot be imposed when goods are reexported.

Applicability of Legal Precedents:
The Tribunal considered the appellant's contentions and legal references, including the decision of the Supreme Court and the High Court, to determine the imposition of redemption fine and penalty. Relying on the precedents, the Tribunal set aside the redemption fine, noting that it was unwarranted due to the export of goods. The penalty under Section 112 of the Customs Act was reduced from &8377; 4,00,000 to &8377; 50,000 considering the circumstances of the case.

In conclusion, the Tribunal modified the impugned order by setting aside the redemption fine and reducing the penalty imposed on the appellant. The appeal was partly allowed, providing relief to the appellant in terms of the revised penalty amount.