2010 (8) TMI 359 - AT - Customs

Customs Act Appeal: Misdeclaration penalty challenged under Section 114(i)

NEPAL ART PALACE Versus COMMISSIONER OF CUSTOMS (EXPORT), MUMBAI

NEPAL ART PALACE Versus COMMISSIONER OF CUSTOMS (EXPORT), MUMBAI - 2010 (260) E.L.T. 282 (Tri. - Mumbai) Issues:1. Imposition of penalty under Section 114(i) of the Customs Act on the grounds of misdeclaration of exported goods.2. Challenge against the Commissioner's findings based on misdeclaration and liability to confiscation.3. Interpretation of goods as handicrafts of iron artwares and artwares.4. Consideration of evidence, including EPCH certificate and visual examination of goods.5. Application of legal tests from previous judgments.6. Requantification of penalty based on findings.Detailed Analysis:1. The appeal challenged the penalty imposition of Rs. 1,00,000 under Section 114(i) of the Customs Act due to misdeclaration of exported goods, rendering them liable to confiscation under Section 113(i) of the Act. The export was made under a duty drawback claim, with goods described as 'GOODS OF INDIAN ORIGIN NOT USED AFTER MANUFACTURING' and 'INDIAN HANDICRAFTS OF IRON ARTWARES.' The Customs authorities deemed the goods misdeclared as not Indian handicrafts, proposing confiscation for undue benefit. The Commissioner held the goods liable to confiscation and imposed the penalty, considering misdeclaration.2. The appeal contested the Commissioner's findings, citing Collector v. Louis Shoppe judgment and distinguishing it. The EPCH certificate endorsed on the invoice certified the goods as handicrafts of iron, challenging the reliance on Louis Shoppe case applicable to wooden handicrafts. The appellant argued that the exported goods, including an 'iron press with chimney,' were handmade and antique, suitable for classification as handicrafts of iron artwares, supported by photographs. The challenge was based on the misdeclaration premise not being legally sustainable.3. The issue revolved around whether the exported goods qualified as handicrafts of iron artwares and artwares. The appellant's claim rested on the EPCH certificate endorsing the goods as handicrafts of iron, requiring proof that they were also artwares. The visual examination of goods by the authorities led to the conclusion that they did not meet the criteria for artwares. The absence of sufficient samples for examination limited the appellant's ability to challenge the findings, except for the miniature 'iron press with chimney,' which was considered an artware.4. The analysis emphasized the importance of evidence, including the EPCH certificate and visual examination of goods, in determining their classification as artwares. While the appellant presented the EPCH certificate endorsing the goods as handicrafts of iron, the burden remained on them to establish them as artwares. The lack of samples for most goods hindered a comprehensive assessment, except for the 'iron press with chimney,' deemed an artware based on visual appeal and certification.5. The judgment critiqued the Commissioner's reliance on the Louis Shoppe case, noting minor errors in classification but upholding the essential finding that the goods were not artwares. Legal tests from previous judgments were applied to support the conclusion that the goods did not qualify as artwares, despite some discrepancies in the Commissioner's observations. The absence of evidence for most goods being artwares reinforced the decision.6. The judgment concluded by remanding the case to the Commissioner for requantifying the penalty based on the findings, particularly concerning the 'iron press with chimney' as an artware. The appeal was disposed of, highlighting the need for a reassessment of the penalty amount in light of the revised classification.