2004 (6) TMI 381 - AT - Customs

Import Duty Misdeclaration Case: Penalties Imposed under Customs Act

EXCEL INDIA PVT. LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI

The case involved misdeclaration of imported goods by M/s. Wipro GE Medical Systems to gain duty concessions. Penalties were imposed on the CHA Company ... Stay/Dispensation of pre-deposit Issues:1. Misdeclaration of imported goods as parts of CCs to gain duty concession.2. Imposition of penalties under Section 112(a)(ii) of the Customs Act on the CHA Company and its General Manager.3. Application of Rule 2(a) of Interpretative Rules to determine eligibility for notification benefits.4. Role and liability of the CHA and its General Manager in the import process.Issue 1: Misdeclaration of imported goodsThe case involved M/s. Wipro GE Medical Systems misdeclaring imported computerised tomography scanner parts as complete scanners to avail duty concession under Notification 16/2000. The appellants imported complete scanners but declared them as parts to benefit from the duty concession. The officers discovered the misdeclaration, leading to a dispute settled with the Settlement Commission. The applicants imported complete CCs but declared them as parts from various ports, seeking benefits under the notification. The differential duty was contested, resulting in the settlement of the dispute with the Commission.Issue 2: Imposition of penalties under Section 112(a)(ii)Penalties were imposed on the CHA Company and its General Manager under Section 112(a)(ii) of the Customs Act. The plea of the applicants was that the penalties were not justified as they did not cause the import of goods liable for confiscation. The proceedings were based on Rule 2(a) of Interpretative Rules, which cannot determine eligibility for notification benefits. The role of the CHA and its General Manager was limited to clearance as directed by clients, without committing acts leading to confiscation.Issue 3: Application of Rule 2(a) of Interpretative RulesThe dispute involved the application of Rule 2(a) of Interpretative Rules to determine eligibility for notification benefits. The rule was contested as not suitable for deciding benefit eligibility. The applicants argued that as CHA, their role was limited to clearance without actions leading to confiscation, thus challenging the imposition of penalties under Section 112(a)(ii).Issue 4: Role and liability of the CHA and its General ManagerThe Commissioner imposed penalties on the CHA Company and its General Manager based on their involvement in directing the supplier to describe goods in a particular manner, leading to misdeclaration. The applicants presented a strong prima facie case in their favor, emphasizing that the importer approached the Settlement Commission to avoid litigation, not admitting liability for confiscation. The determination of whether the goods were liable for confiscation was crucial in deciding the penalty under Section 112(a) of the Customs Act. Pending appeal disposal, the pre-deposit of penalties by the applicants was waived, considering the merits of their case.