2023 (11) TMI 1175 - AT - Customs

Confiscation of imported goods - redemption fine - levy of penalties - Maxx Air Pedestal Fan with essential spares - evasion of Customs Duty - MRP of the goods assumed to be mis-declared by the importer - HELD THAT - There was differential duty worked out, which was accepted and also paid by the appellant-importer. From the documents placed on record, we do not find any mala fides on the part of the appellant-importer. A perusal of the e-mail exchanged between the appellant and their vendor clearly indicates the request insofar as the MRP is concerned, but however, it was perhaps the mistake of the vendor/supplier in not effecting the required RSP tag. No doubt, the original price as per the purchase order, which is placed at page number 53 of the appeal memorandum (dated 27.05.2013) was INR 2400 per piece - The requirement of Section 4A(1) ibid. is the declaration on the package the retail sale price (RSP) of the goods and sub-section (2) thereof states that such declared value shall be deemed to be the retail sale price (RSP) declared on such goods less such amount of abatement, if any. The price tag admittedly on the package was the maximum retail price (MRP) displayed, which cannot be the RSP, since RSP may not always be the MRP and MRP also may not always be the RSP. The case of the appellant comes out of the mischief of Section 112(a) since the alleged mis-declaration would not per se justify confiscation of the goods in question under Section 111. This is because the appellant perhaps chose to go by the new MRP list (placed at page 57 of the appeal memorandum) whereas the vendor, for the best reasons known, affixed MRP of INR 2100/- and hence, no mala fides could be attached on the part of the appellant. Facts of the case on hand are very peculiar inasmuch as, clearly there was an understanding as regards the value is concerned, in support of which documents in the form of e-mails have been placed on record, which are not disputed by the Revenue. The value affixed on the label did not clearly show the price agreed upon in the purchase order dated 27.05.2013. Further, the said price tag was sought to be revised for the reason of fluctuation in the value of the Indian Rupee as against the U.S. Dollar, which fact was also not disputed, but however, the same apparently was not implemented by the foreign vendor / supplier. Thus, the bona fides of the appellant cannot be suspected just because the vendor / supplier chose to affix a different price tag and therefore, there is no case for the Revenue to order confiscation of the goods in question - there is no question of redemption fine under Section 125 ibid - appeal allowed.

Summary

Issues:
The issues to be decided are:
1. Whether the order of confiscating the goods under Section 111(m) of the Customs Act, 1962 is correct?
2. Whether the imposition of penalties under Sections 112(a) and 114AA of the Customs Act, 1962 is justified?

Issue 1 - Confiscation of Goods:
The appellant imported goods with a declared Maximum Retail Price (MRP) of INR 2100 per piece, but the actual MRP affixed was INR 2650. The appellant explained that the discrepancy was due to a communication gap with the supplier, supported by email exchanges and a purchase order. The Tribunal found no mala fides on the appellant's part, as the vendor mistakenly affixed the lower MRP. The Tribunal held that the mis-declaration did not warrant confiscation under Section 111(m) as there was no deliberate intention to misrepresent the MRP.

Issue 2 - Imposition of Penalties:
Regarding penalties under Sections 112(a) and 114AA of the Customs Act, the Tribunal ruled in favor of the appellant. Section 114AA requires knowledge or intention on the importer's part for penalties to apply. In this case, the appellant's actions were deemed unintentional due to the vendor's error in affixing the incorrect MRP. Therefore, the Tribunal concluded that the penalties imposed were unwarranted and ordered their deletion.

The Tribunal referenced Section 4A of the Central Excise Act, 1944, which specifies the valuation of goods with reference to retail sale price. The Tribunal clarified that the MRP displayed on the goods cannot always be considered the Retail Sale Price (RSP), and in this case, the appellant followed the revised MRP list agreed upon with the vendor. The Tribunal highlighted that the appellant's actions were based on the agreed terms and the mis-declaration was not intentional.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, finding in favor of the appellant. The decision was based on the lack of deliberate misrepresentation by the appellant and the genuine misunderstanding with the vendor regarding the MRP of the imported goods.