2025 (1) TMI 1382 - AT - Customs

Misdeclaration of imported good - Goods found to be zinc ingots bearing the mark calcimin zinc contrary to the declaration that the goods were lead ingots - re-determination of declared value - demand of differential duty - confiscation - redemption fine - penalty - HELD THAT - The proprietor of the appellant had pleaded that it was a case of a bonafide mistake on the part of the foreign supplier and there was no evasion of duty. In view thereof he requested for release of the goods on payment of fine and penalty so as to avoid the further liability of heavy demurrage charges. The admission is not of any guilt on the part of the importer. It is not a case of malafide intention to evade duty or import goods which are prohibited as both lead ingots and zinc ingots were freely importable items. Moreover there was not much difference in the price of the two products rather as per the supplier the lead ingots were more expensive than zinc ingots and even the rate of duty of the two items is also the same and hence the appellant would not have really gained any monetary benefit by resorting to mis-declaration. At the most the appellant can be said to have made an incorrect declaration which can be termed as a bonafide mistake on the part of the foreign supplier for which neither confiscation can be directed nor penalty can be imposed. Surprisingly the adjudicating authority having accepted the contention of the importer that it was a bonafide mistake of the supplier that they have dispatched the goods by mistake since the importer does not appear to gain much by way of mis-declaration of the description since rate of duty on the two items is also same ordered for confiscation with redemption fine and penalty. In view of the peculiar facts of the present case neither confiscation nor imposition of redemption fine and penalty is justifiable and therefore the same needs to be set aside. Conclusion - The mis-declaration was a bona fide mistake not warranting confiscation redemption fine or penalty. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the mis-declaration of goods as "lead ingots" instead of "zinc ingots" constituted a violation of the Customs Act, 1962, warranting confiscation, redemption fine, and penalty.
• Whether the appellant's claim of a bona fide mistake by the foreign supplier absolves them of liability under the Customs Act, 1962.
• Whether the imposition of redemption fine and penalty under Section 112(a) of the Customs Act, 1962, was justified in the circumstances of the case.

ISSUE-WISE DETAILED ANALYSIS

Mis-declaration of Goods

• Relevant Legal Framework and Precedents: The relevant provisions under the Customs Act, 1962, include Section 46(4) concerning the declaration of goods and Section 112(a) regarding penalties for improper importation. Precedents cited include decisions from Suzuki Powertrain India Ltd and Sorento Granito Pvt. Ltd, where bona fide mistakes by foreign suppliers were not penalized.
• Court's Interpretation and Reasoning: The Tribunal noted that the appellant's declaration of goods was based on documents provided by the foreign supplier, who later admitted the mistake. The Tribunal emphasized that both "lead ingots" and "zinc ingots" are freely importable, with no significant price difference, negating any intent to evade customs duty.
• Key Evidence and Findings: The appellant provided a letter from the foreign supplier admitting the shipping error. The statement of the appellant's proprietor confirmed the absence of intent to mis-declare, supported by previous import contracts showing consistent transactions.
• Application of Law to Facts: The Tribunal applied the legal principles from cited precedents, determining that the mis-declaration was a bona fide mistake by the foreign supplier. The absence of intent to evade duty or gain monetary benefit was crucial in this determination.
• Treatment of Competing Arguments: The respondent's reliance on the appellant's admission under Section 108 was countered by the Tribunal's interpretation that the admission was not of guilt but a request for leniency due to the supplier's error.
• Conclusions: The Tribunal concluded that the mis-declaration did not warrant confiscation, redemption fine, or penalty, as it was not a case of malafide intention.

Imposition of Redemption Fine and Penalty

• Relevant Legal Framework and Precedents: Section 112(a) of the Customs Act, 1962, provides for penalties in cases of improper importation. The Tribunal referenced previous cases where penalties were set aside due to bona fide mistakes.
• Court's Interpretation and Reasoning: The Tribunal found that the adjudicating authority's decision to impose a redemption fine and penalty was inconsistent with its own findings of no intent to evade duty. The Tribunal emphasized the lack of any monetary gain from the mis-declaration.
• Key Evidence and Findings: The Tribunal noted the supplier's admission of error and the appellant's readiness to pay fines as evidence of a bona fide mistake, not an attempt to evade duty.
• Application of Law to Facts: The Tribunal applied the legal principles from the cited precedents, determining that the circumstances did not justify the imposition of a redemption fine or penalty.
• Treatment of Competing Arguments: The respondent's argument for penalties based on the appellant's admission was rejected, as the Tribunal found no evidence of malafide intent.
• Conclusions: The Tribunal set aside the redemption fine and penalty, concluding that they were unjustified given the circumstances.

SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal stated, "Neither confiscation nor imposition of redemption fine and penalty is justifiable and therefore the same needs to be set aside."
• Core Principles Established: The judgment reinforces the principle that bona fide mistakes, particularly those admitted by foreign suppliers, do not warrant penalties under the Customs Act, 1962, in the absence of malafide intent.
• Final Determinations on Each Issue: The Tribunal concluded that the mis-declaration was a bona fide mistake, not warranting confiscation, redemption fine, or penalty. The appeal was allowed, and the impugned order was set aside.