Customs, Excise and Service Tax Appellate Tribunal

Pramod Kumar Vs. C.C., New Delhi

MANU/CE/0973/2017

04.12.2017

Customs

Penalty can be imposed for use of false and incorrect material, Authorities have to prove that person concerned has deceived exchequer for his wrongful gain

The Appellant imported Speed Post Parcel at Foreign Post Office. Goods were containing declaration of "Artificial Gift Item". Customs Officers after examining the goods, found that the parcel contained "unbranded Micro SD Cards" of various storage capacities. Since, there was mis-declaration, the Department seized the same. A show cause notice was issued, proposing to confiscate goods on the ground of mis-declaration and under-valuation of the same. By impugned order, Commissioner of Customs, Air Cargo Exports, rejected the value as declared by the Appellant and re-determined the assessable value and also confiscated the goods under Section 111(d) and (m) of the Customs Act, 1962, with the option to redeem the same on payment of redemption fine. Further, the impugned order has also imposed a penalty under Section 112 and 114AA of the Act.

In present case, the Appellant had classified the imported goods i.e. "unbranded Micro SD Cards" under CTH 85235220, providing for 'Nil' rate of Basic Customs Duty. However, Adjudicating authority had classified the subject goods under CTH 85235100, which attract 10% Basic Customs Duty. For arriving at classification issue, Adjudicating authority has referred to the CBEC Circular No. 12/2002 : MANU/CUCR/0026/2012
dated 1st March, 2012. Goods of Tariff Item No. 8523 are exempted from payment of Basic Customs Duty under Notification No. 24/2005-Cus., dated 1st March, 2005, as amended. Further, the CBEC vide Circular dated 20th July, 2016 has also clarified that, the benefit of the said notification is extendable to Micro/Mini SD cards classified under CTH 85235100. Thus, it is apparent that, change in classification of subject goods by the Department will not create any additional Basic Customs Duty liability for the Appellant. Therefore, the Appellant is not liable to pay the Basic Customs Duty on the imported goods, even under the classification made by the Department, which was different than the classification made by it.

The adjudicating authority has rejected the value of imported goods declared by the Appellant on the import documents and re-determined the assessable value as Rs. 2,10,71,523/-. Further, such goods were confiscated under Section 111(d) and (m) of the Act, with option to the importer-appellant to redeem the same on payment of redemption fine of Rs. 40,00,000/- in terms of the provisions of Section 125 of the Act. So far as the issue of confiscation of impugned goods is concerned, provisions of clause (m) of Section 111 is attracted as the value and declaration of the goods made in the post parcel do not correspond to the actual goods imported by the Appellant. Thus, confiscation of goods and imposition of redemption fine in the impugned order is sustainable under the law. However, quantum of redemption fine imposed on the Appellant, is in the higher side, inasmuch as, the Appellant had not made any false declaration with regard to the actual content in the parcel, filed proper documents for assessment of the Bill of Entry, paid applicable duty. Therefore, in the interest of justice and in view of possible benefit of Commercial profit on such import, the quantum of redemption fine is reduced to Rs. 20,00,000/-.

The impugned order has confiscated the impugned goods and imposed penalties on the ground that, Appellant had contravened the provisions of Section 82 of the Act. In case of import of goods by post parcel, a deeming fiction has been created in Section 82 of Act, providing that any label or declaration accompanying the goods should be deemed to be an entry for import, for the purpose of the Customs Act. As per such statutory provision, the proper officer of Customs goes by the declaration of the content of goods in the parcel, declared or labelled. Further, imposition of penalty under Section 112 and 114AA of the Act are not dependant on the provisions of deeming fiction under Section 82 of the Act. Since, the goods were not accompanied by correct declaration as to the contents, the confiscation and redemption is justifiable. However, the statute mandates that penalty can be imposed for use of false and incorrect material, the authorities have to prove that in fact, the person concerned has deceived the exchequer for his wrongful gain.

In instant case, the Department has not brought on any evidence to prove Appellant's guilt in mis-declaring the goods. Rather, the submissions of the Appellant recorded in the impugned order has been completely ignored and brushed aside by the original authority. Thus, in absence of any specific substantiation regarding the involvement of the Appellant in fraudulent activities like mis-declaration in the present case, imposition of penalty, will not stand for the judicial scrutiny. Accordingly, penalty imposed on the appellant is set aside. The Appellant is not liable to pay Basic Customs Duty in terms of Notification No. 24/2005-Cus., dated 1st March, 2005, as amended read with CBEC Circular dated 20th July, 2016. Redemption fine is reduced. Penalties imposed under Section 112 and 114AA are set aside.

Tags : Goods Confiscation Penalty

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