2006 (6) TMI 353 - AT - Customs

Customs Appeal Tribunal overturns confiscation and penalties citing lack of intent to evade duty

The Tribunal allowed the appeal, setting aside the confiscation of goods and penalties imposed on the appellant. The decision emphasized the absence of ... Confiscation and penalty Issues:1. Waiver of predeposit and stay of recovery.2. Early disposal of the appeal.3. Correctness of declared value of imported goods.4. Confiscation of goods and imposition of penalty.Issue 1: Waiver of predeposit and stay of recoveryThe appellant filed two applications seeking waiver of predeposit and stay of recovery in relation to the duty and penalty amounts, along with a request for early disposal of the appeal. The Tribunal, after examining the records and hearing both parties, decided to dispose of the appeal finally at that stage. The Tribunal dispensed with the predeposit, allowed early hearing, and proceeded to deal with the appeal.Issue 2: Early disposal of the appealThe appellants imported a 'MIXING ROLL (18 INCHES)' from South Korea and declared its unit price as 69,000 USD. The goods were assessed based on this declaration, but clearance was withheld due to doubts about the declared value. A Chartered Engineer appointed by the Department inspected the goods and determined them to be 'used and reconditioned,' valuing them at 72,000 USD (CIF). The assessable value was proposed to be enhanced based on this report, leading to a differential duty demand. The original authority also ordered confiscation of the goods and imposed fines and penalties. The appeal challenged this decision.Issue 3: Correctness of declared value of imported goodsThe Tribunal found that the order of confiscation was not justified in this case. The goods were described as 'MIXING ROLL (18 INCHES)' based on the supplier's invoice, and the enhanced value determined by the Chartered Engineer was acceptable to the appellant. The dispute centered on the correct value of the goods, not the description. The Tribunal noted that Section 111(m) of the Customs Act requires an element of mens rea for confiscation, which was lacking in this case. Citing a relevant precedent, the Tribunal held that misdeclaration must be conscious and intentional for confiscation to be warranted. As the appellant had declared the goods based on the supplier's invoice, there was no intentional misdeclaration, leading to the setting aside of the confiscation order and associated penalties.Issue 4: Confiscation of goods and imposition of penaltyThe Tribunal set aside the impugned order except for valuation and duty demand, allowing the appeal to the extent of overturning the confiscation and penalty. The decision emphasized that for confiscation under Section 111(m) of the Customs Act, there must be evidence of deliberate misdeclaration with intent to evade duty, which was absent in this case. The order of confiscation and penalty were deemed unsustainable due to the lack of mens rea on the part of the importer, resulting in the favorable outcome for the appellant.This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Chennai, highlights the issues of waiver of predeposit, correctness of declared value, and the confiscation of goods and imposition of penalties, providing a comprehensive overview of the legal reasoning and outcomes in each aspect of the case.