2022 (4) TMI 378 - AT - Customs

Levy of Fine and penalty u/s 125 and Section 112(a) of the Customs Act, 1962, at a reduced rate - deliberate undervaluation or mis-declaration to avoid duty, or not - HELD THAT - It would not be inappropriate to mention here that the Appellant s case is squarely covered by the judgment of Hon'ble Madras High Court in Commissioner of Customs (Sea), Chennai-I Vs. M.R. Associates 2013 (8) TMI 275 - MADRAS HIGH COURT wherein it was clearly held that enhancement of value based on voluntary statement concerning acceptance of value, may be for early clearance of goods, would not invoke penal provisions nor confiscation of goods can be made in lieu of redemption fine, and learned Commissioner (Appeals) has placed his reliance heavily on it but erroneously understood that in the said judgment there was confirmation of confiscation and redemption fine. In the instant case, as could be seen from the case record, Appellant had filed Bill of Entry on the basis of the item description mentioned by the supplier in the import document and had agreed to pay duty on the enhanced value after the same was found to be item of different size. Learned Commissioner (Appeals) had observed in unequivable terms that the same importer i.e. Appellant had cleared some goods at or around the same time at higher rate for which deliberate undervaluation or mis-declaration to avoid duty is farfetched (underlined to emphasize). More importantly, he had also observed that in valuation of imported goods, there is no place for minimum Customs value but appellant preferred not to challenge the departmental action. Therefore, it cannot be said that appellant had made a tie or contract for payment of higher value, so as to make him liable for violation of Civil Obligations for the purpose of imposing penalty on him and it has been settled through judicial precedent that voluntarily acceptance of higher value and willingness to pay the duty at the enhanced rate would exempt the Appellant from liability of confiscation and redemption fine. The appeal is allowed.

Summary

Issues:
Confirmation of fine and penalty by the Commissioner of Customs (Appeals) at a reduced rate under Section 125 and Section 112(a) of the Customs Act, 1962, assailed by the assessee.

Analysis:
The case involved the appeal against the confirmation of fine and penalty by the Commissioner of Customs (Appeals) under Section 125 and Section 112(a) of the Customs Act, 1962. The appellant, an importer, filed a Bill of Entry for clearance of Chatons (Beads) but discrepancies were found during examination, leading to confiscation of goods under Section 111(m) of the Customs Act. The adjudicating authority re-determined the value, imposed fines, and penalties. The Commissioner of Customs (Appeals) reduced the fine and penalty amounts substantially but confirmed the confiscation order despite explanations and evidence submitted by the supplier during investigation. The appeal primarily focused on the legality of the confirmed fine and penalty.

The appellant argued that the imposition of redemption fine lacked a legal basis as the margin of profit was not considered. Reference was made to previous judgments to challenge the justification for confiscation and penal provisions invoked by the Commissioner of Customs (Appeals). The appellant sought the Tribunal's intervention to set aside the confirmed fine and penalty.

The Respondent-Department supported the Commissioner (Appeals)'s order, highlighting that mens rea is not essential for imposing penalties for breach of "Civil Obligations." The Respondent argued that the fine and penalty were appropriately reduced to align with the offense committed, emphasizing that no further intervention was necessary.

The Tribunal analyzed the case in light of relevant legal precedents. It noted that the case was akin to a judgment of the Hon'ble Madras High Court, emphasizing that enhancement of value based on a voluntary statement does not warrant penal provisions or confiscation. The Tribunal observed that the appellant had filed the Bill of Entry based on the supplier's information and agreed to pay duty on the enhanced value, indicating no deliberate undervaluation or mis-declaration. The Tribunal concluded that the appellant's actions did not amount to a violation of "Civil Obligations," as voluntary acceptance of the higher value exempted the appellant from liability for confiscation and redemption fine. Consequently, the Tribunal allowed the appeal, setting aside the confirmed fine for confiscation and penalty.

In conclusion, the Tribunal's decision overturned the Commissioner of Customs (Appeals)'s order, emphasizing that the appellant's actions did not warrant the confirmed fine and penalty, as they did not constitute a breach of "Civil Obligations." The judgment highlighted the importance of voluntary acceptance of higher values in determining liability for confiscation and redemption fines under the Customs Act, 1962.