2013 (3) TMI 348 - AT - Customs

Imported goods confiscated for misdeclaration, penalties modified. Compliance upheld.

The appellate authority confirmed the absolute confiscation of imported goods containing cigarettes instead of declared items. The demand for customs duty ... Absolute confiscation - liability for customs duty after confiscation - penalty under Section 114A of Customs Act, 1962 - penalty under Section 112(a) of Customs Act, 1962 - courier clearance under Courier Imports & Exports (Clearance) Regulations, 1998 - authorized courier's obligation to obtain consignee authorization - mis-declaration and confiscation under Section 111 of Customs Act, 1962Absolute confiscation - liability for customs duty after confiscation - Effect of appellate authority's order of absolute confiscation on demand of customs duty against the courier. - HELD THAT: - The appellate authority ordered absolute confiscation of the impugned goods and Revenue did not appeal against that order. The Court held that once absolute confiscation is confirmed, clearance of the goods from Customs does not take place and, consequently, no demand for duty arises against the courier in respect of those goods. Therefore the first appellate authority's setting aside of the demand of duty is sustainable in view of the absolute confiscation. [Paras 7]No duty arises once goods are absolutely confiscated; setting aside of the demand is sustained.Penalty under Section 114A of Customs Act, 1962 - courier clearance under Courier Imports & Exports (Clearance) Regulations, 1998 - authorized courier's obligation to obtain consignee authorization - Whether penalty under Section 114A could be sustained against the authorized courier for alleged mis-declaration when CBE-IV was filed and the courier had acted under the courier regulations. - HELD THAT: - The Court examined the scheme of the Courier Regulations and the clearance procedure for CBE-IV, noting that authorized couriers act as agents of consignees and are obliged to obtain consignee authorization but that the regulatory procedure contemplates discrepant cases being examined and, absent evidence of complicity, action lies primarily against the consignee. The penalty under Section 114A applies where there is intentional evasion, collusion, wilful misstatement or suppression by the person liable to pay duty. In the present facts the respondent had filed the courier Bill of Entry in prescribed form and was not the importer; there was no sufficient evidence of wilful evasion by the courier itself. The Court therefore held the penalty under Section 114A against the courier company was unwarranted and correctly set aside by the first appellate authority. [Paras 9]Penalty under Section 114A against the courier company set aside.Penalty under Section 112(a) of Customs Act, 1962 - mis-declaration and confiscation under Section 111 of Customs Act, 1962 - Sustainability of penalty under Section 112(a) on the proprietor of the courier firm where the consignment has been absolutely confiscated. - HELD THAT: - The Court observed that the proprietor had filed the courier Bill of Entry and the consignment was confiscated. Section 112(a) can be invoked against the proprietor in the factual matrix where confiscation has been upheld and the proprietor and firm are not distinct entities for this purpose. Having regard to mitigating facts (the proprietor was abroad when the consignment was received) and in the interest of justice, the Court modified the appellate order by upholding the liability under Section 112(a) but reducing the penalty to a specified reduced amount. [Paras 10]Penalty under Section 112(a) on the proprietor is upheld but reduced.Final Conclusion: The appeals are disposed: the appellate authority's absolute confiscation of the goods means no duty is leviable and the demand is thereby set aside; the penalty under Section 114A on the courier company is set aside; the penalty under Section 112(a) on the proprietor is upheld but reduced as indicated. Issues Involved:1. Confiscation of imported goods.2. Demand of customs duty and interest.3. Imposition of penalties under Sections 114A and 112 of the Customs Act, 1962.4. Compliance with Courier Imports & Exports (Clearance) Regulations, 1998.Issue-wise Detailed Analysis:1. Confiscation of Imported Goods:The first appellate authority confirmed the confiscation of the imported goods, which were found to contain 2,00,000 cigarettes instead of the declared 'Gift items, garments and chocolates.' The goods were seized under the reasonable belief of being liable for confiscation under Section 111 of the Customs Act, 1962. The appellate authority modified the order by setting aside the option for redemption fine and ordered absolute confiscation of the goods valued at Rs. 7,00,000/-. The Revenue did not appeal against this absolute confiscation.2. Demand of Customs Duty and Interest:The Show Cause Notice demanded duty amounting to Rs. 5,22,488/- under Section 28 of the Customs Act, 1962 along with interest under Section 28AA/28AB. The first appellate authority set aside this demand on the grounds that with the absolute confiscation of the goods, no duty arises as the goods do not clear from the Customs area. This decision was upheld, noting that the duty demand does not apply once the goods are absolutely confiscated.3. Imposition of Penalties under Sections 114A and 112 of the Customs Act, 1962:The first appellate authority set aside the penalties imposed under Section 114A and Section 112 on the firm and its proprietor. The appellate authority reasoned that the authorized courier is merely an agent and not liable for mis-declaration unless complicity is proven. The penalty under Section 114A was deemed unwarranted as the courier company filed the Bill of Entry in the prescribed format and was not liable for duty. However, the penalty under Section 112 was reconsidered, and it was decided that the proprietor of the firm should be penalized, but the amount was reduced to Rs. 25,000/- due to the proprietor's absence from India at the time of the consignment's receipt.4. Compliance with Courier Imports & Exports (Clearance) Regulations, 1998:The Revenue argued that the courier company violated several regulations, including failing to obtain authorization from consignees and mis-declaring the goods. The appellate authority found that the respondent acted as a courier and filed the Bill of Entry as required. The possibility of discrepancies was anticipated, and the regulations did not specify actions against couriers for discrepancies unless complicity was proven. The appellate authority concluded that the courier company followed the prescribed procedure, and there was no evidence of their involvement in the mis-declaration.Conclusion:The appeals were disposed of with the following outcomes:- Absolute confiscation of the goods was upheld.- The demand for customs duty and interest was set aside.- The penalty under Section 114A was set aside, while the penalty under Section 112 was reduced to Rs. 25,000/- for the proprietor of the courier firm.- The compliance with the Courier Imports & Exports (Clearance) Regulations, 1998 was deemed satisfactory, with no evidence of the courier's complicity in the mis-declaration.