2016 (9) TMI 1167 - AT - Customs

Customs Act penalties overturned due to genuine mistake; leniency granted for proactive rectification

The Tribunal set aside the order of confiscation, redemption fine, and penalty imposed under the Customs Act, 1962, in a case involving mis-declaration of ... Mis-declaration of goods in the shipping bills - confiscation of export goods under section 113 of the Customs act, 1962 - option to pay redemption fine of ₹ 20 lakh under section 125 of the Customs Act, 1962 - imposition of penalty of ₹ 10 lakh under section 114 (ii) of Customs act 1962 - Duty drawback at ICD - export of man-made fiber jeans - detention of goods - provisional release of goods on execution of bank guarantee - whether the mistake committed is bonafide and no mens-rea involved? - Held that: - the mis-declaration of the details of the goods made in the shipping bills was not intentional and it has arisen in due to a bona fide mistake. This view is further strengthened by the fact that the appellant himself has informed the customs authorities about the mistake even before the consignment was taken up for examination. The Commissioner in the impugned order has fairly recorded that the mistake could not have gone unnoticed. - there is absolutely no malafide. Confiscation and penalty imposed on the ground that the party failed to file an amendment to the shipping bill as required under law even after they realized that they had filed wrong particulars. Similar issue decided in the case CCE, Calcutta - II vs. India Aluminium Co. Ltd [2010 (9) TMI 275 - SUPREME COURT OF INDIA] - the steps by way of penal action not warranted - confiscation and penalty set aside - appeal allowed - decided in favor of appellant. Issues:1. Confiscation of export goods under Customs act, 19622. Mis-declaration of goods for export claiming duty drawback3. Bona fide mistake in declaration of goods4. Imposition of redemption fine and penalty under Customs act, 1962Analysis:1. The appeal was filed against the order of confiscation of export goods valued at &8377; 2,97,66,478 under section 113 of the Customs act, 1962. The appellant had filed 14 shipping bills declaring 124464 pieces of man-made fiber jeans for export. However, upon examination, it was found that only 62232 pieces were present. The appellant had requested to detain and return the container before customs examination, but the request was not accepted. A show cause notice was issued for mis-declaration of goods for export under claim for duty drawback, leading to the confiscation order by the Commissioner of Customs, Bhopal.2. The appellant argued that the mis-declaration was not intentional but a bona fide mistake. They explained that the wrong dispatch of documents led to the error in declaration. The goods were meant for two different export orders but were mixed up due to oversight. The customs authorities were informed about the mistake before the examination, showing the appellant's proactive approach in rectifying the error. Despite this, the Commissioner imposed redemption fine and penalty on the appellant.3. The Tribunal analyzed the submissions and the Commissioner's findings. It was noted that the mis-declaration was unintentional and arose due to a genuine mistake. The appellant had informed the customs authorities about the error promptly. The Tribunal referred to previous case laws where penalties were not imposed for bona fide mistakes that were rectified by the assessee. Citing cases like CCE, Calcutta - II vs. India Aluminium Co. Ltd. and Surya Roshni Ltd. vs. CC, New Delhi, the Tribunal emphasized that penalties are not warranted in cases of genuine errors rectified by the party themselves.4. Considering the facts and legal precedents, the Tribunal set aside the impugned order of confiscation, redemption fine, and penalty. The appeal was allowed in favor of the appellant, highlighting that penal actions were not justified in the circumstances of the case. The judgment was pronounced on 24/08/16 by the Appellate Tribunal CESTAT NEW DELHI, comprising Mrs. Archana Wadhwa Member (Judicial) and Shri V. Padmanabhan, Member (Technical).