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The Hon'ble CESTAT, Principal Bench, New Delhi, in Shivam Empire Versus Commissioner of Customs, Jodhpur - 2026 (4) TMI 1602 - CESTAT NEW DELHI held that the late submission of required import certificates constitutes a procedural and technical lapse rather than a malafide attempt to evade duty. Consequently, the Tribunal set aside the penalty under Section 114AA and significantly reduced the redemption fine and penalty under Section 112(a)(i) of the Customs Act, 1962 ('the act').
Facts:
M/s Shivam Empire ('the appellant') imported 'BRAD Nail' from China with an assessable value of Rs. 27,06,181/-. The Bill of Entry was initially flagged due to the non-submission of two mandatory documents: the Legal Metrology Packaged Commodities ('LMPC') certificate and the Steel Import Monitoring System ('SIMS') certificate. Investigation revealed that the SIMS registration was applied for on the same day the Bill of Entry was filed, violating the rule requiring registration between the 60th and 15th day before arrival. The LMPC certificate was also submitted after the filing of the Bill of Entry. The adjudicating authority held that the importer had violated Sections 46(4) and 46(4A) of the act by failing to ensure accuracy and compliance of the supporting documents at the time of filing.
The adjudicating authority confiscated the goods, imposing a Redemption Fine of Rs. 3,50,000/-, and penalties of Rs. 2,25,000/- under Section 112(a)(i)and Rs. 2,50,000/- under Section 114AA. On appeal, the Commissioner (Appeals) reduced both penalties to Rs. 1,00,000/- each but maintained the redemption fine. Aggrieved by the said order, the appellant has filed the present appeal.
The appellant submitted that late submission of both certificates are only a technical lapse and there is no evasion of any duty neither any false or incorrect materials was provided. Hence, section 114AA is not legally sustainable.
Issues:
Whether the quantum of the Redemption Fine and penalties imposed was appropriate for the specific procedural lapses identified?
Held:
The Hon'ble CESTAT, Principal Bench, New Delhi, in Shivam Empire Versus Commissioner of Customs, Jodhpur - 2026 (4) TMI 1602 - CESTAT NEW DELHI held as under:
- Observed that the appellant filed the impugned bill of entry without SIMS certificate and the LMPC certificate. Although these documents were submitted subsequent to filing the bill of entry, which is a procedural lapse.
- By relying on M/s Paramount Surgimed Limited Versus Commissioner of Customs, Jaipur-1 - 2025 (10) TMI 336 - CESTAT NEW DELHI, Hindustan Steel Limited Versus State Of Orissa - 1969 (8) TMI 31 - Supreme Court, held that the Procedure lapses are minor errors or deviations from established procedures, that do not fundamentally alter the substantive outcome.
- Held that merely delayed submission of relevant certificates which establishes that there was no malafide intent on part of the appellant to violate the provision, or any intent to evade. Hence, penalty under section 114AA cannot be sustained and redemption fine was reduced to Rs. 1 Lakh and penalty under section 112(a)(i) reduced to Rs 50,000.
Relevant Sections and Notifications:
Section 46(4): The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, [and such other documents relating to the imported goods as may be prescribed].
Section 46(4A): The importer who presents a bill of entry shall ensure the following, namely:-
(a) the accuracy and completeness of the information given therein;
(b) the authenticity and validity of any document supporting it; and
(c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force.]
[Section 114AA].Penalty for use of false and incorrect material.-If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.
Rule 27 of the Legal Metrology (Packaged Commodities) Rules, 2011: Registration of manufacturers, packers and importers.- [requirement of LMPC Certificate]
(1) Every individual, firm, Hindu undivided family, society, company or corporation who or which pre-packs or imports any commodity for sale, distribution or delivery shall make an application, accompanied by a fee of rupees five hundred, to the Director or the Controller for the registration of his or its name and complete address;
DGFT Notification No. 17/2015-2020 dated 05.09.2019:[requirement of SIMS Certificate]
In exercise of powers conferred by Section 3 & 9 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends the import policy from 'free' to 'free subject to compulsory registration under Steel Import Monitoring System (SIMS)' for the following items under Chapter 72, 73 and 86 of ITC (HS), 2017, Schedule - I (Import Policy)