2022 (5) TMI 261 - AT - Customs

Levy of redemption fine and penalty - MIsdeclaration of quantity of export goods - rejection of declared value - Big Onions - perishable commodity - case of appellant is that excess quantity taken in order to compensate the weight loss on account of drying of the onion - monetary benefit out of the excess quantity declared is made or not - HELD THAT - The appellant has misdeclared almost 11 MTs of goods. The explanation given is that onion being a perishable commodity, they have loaded excess quantity to compensate the weight loss on account of drying of the cargo. Though such an explanation cannot be accepted when the excess quantity is so huge, it has to be seen that the redemption fine for the excess value of Rs.4,76,400/- is too high. The authorities below have imposed a redemption fine of Rs.3,35,750/-. Since the cargo is of perishable in nature, the profit margin would be very less. The redemption can be reduced to Rs. One lakh. Penalty - HELD THAT - Section 114(iii) states that the penalty imposed is not to exceed the value of the goods as declared by the exporter or the value as determined under the Act whichever is greater. For these reasons, it is found that the penalty imposed under sec. 114(iii) does not require any interference. On perusal of the orders passed by the authorities below, nothing is brought out to prove and establish that the appellant has knowingly and intentionally made any false documents. It is explained by them that the excess quantity was loaded in order to compensate the loss on account of drying of the onion which are perishable goods. Taking these facts into consideration, the penalty imposed under sec. 114AA is set aside. The impugned order is modified to the extent of reducing the redemption fine from Rs.3,33,750/- to Rs.1,00,000/- (Rupees one lakh only) and setting aside fully the penalty imposed under sec. 114AA of the Customs Act, 1962 - Appeal allowed in part.

Summary

Issues:
1. Redetermination of value of exported goods
2. Confiscation of goods under Customs Act, 1962
3. Imposition of redemption fine and penalties
4. Contest regarding redemption fine and penalties

Analysis:

1. The appellant exported big onions to Sri Lanka, declaring a total FOB value and claiming drawback. However, upon examination, it was discovered that the actual weight of the cargo exceeded the declared weight significantly. The authorities seized the entire cargo under mahazar on the suspicion of misdeclaration, leading to the redetermination of the value of the goods.

2. The adjudicating authority, under the Customs Act, 1962, rejected the declared value, redetermined the value of the goods, and ordered for confiscation with an option for redemption on payment of a fine. The appellant contested the redemption fine and penalties imposed, arguing that the excess quantity was loaded due to the perishable nature of onions to compensate for weight loss during transit.

3. The appellant's counsel contended that no monetary benefit was derived from the excess quantity, and the penalties imposed were excessive and disproportionate to the situation. The appellant requested leniency, highlighting that the penalties did not consider the lack of extra profit gained from the misdeclaration.

4. The tribunal acknowledged the misdeclaration of goods by the appellant but considered the nature of the cargo, being perishable, in determining the appropriate redemption fine. The tribunal reduced the redemption fine significantly, recognizing the minimal profit margin in perishable goods and the lack of proven intentional false declarations by the appellant. Consequently, the tribunal modified the impugned order by reducing the redemption fine and setting aside the penalty imposed under a specific section of the Customs Act, partially allowing the appeal.