2017 (8) TMI 873 - AT - Customs

Tribunal reduces fines for appellant due to lack of malicious intent and willingness to rectify.

Phoenix International Ltd. Versus Commissioner of Customs (EP), Mumbai-II

The Tribunal partially allowed the appeal in favor of the appellant, reducing the redemption fine from Rs. 3.5 lakhs to Rs. 1 lakh and the penalty from ... N/N. 1/64-Cus., dated 18-1-1964 - footwear - prohibited goods - denial of benefit on the ground that appellant have not mentioned country of origin on the package of the goods, i.e. footwear, therefore there is violation of the condition which made the goods prohibited - Held that: - in accordance with the N/N. 1/64-Cus., country of origin is required to be mentioned on the package of the footwear which appellant failed to do so - However, it is observed from the facts that the appellant proposed to affix the country of origin, i.e. “Made in China” in their factory and certificate can be obtained from the jurisdictional excise authority and shall be produced before the Customs Authority, however, same has been denied by the Customs Authority - appellant had no mala fide intention in not affixing the country of origin on the packages of the footwear. The goods were liable for confiscation, however appellant deserves the leniency. We therefore reduced the redemption fine from ₹ 3.5 lacs to ₹ 1 lac., penalty also reduced from ₹ 75,000/- to ₹ 25,000/-. Appeal allowed - decided partly in favor of appellant. Issues:Violation of Notification No. 1/64-Cus regarding country of origin on goods, imposition of redemption fine and penalty.Analysis:The appeal in this case was directed against an Order-in-Appeal passed by the Commissioner of Customs (Appeals), Mumbai-II, upholding the imposition of a redemption fine and penalty due to non-compliance with Notification No. 1/64-Cus. The appellant had failed to mention the country of origin on the package of imported footwear, leading to a violation of the condition rendering the goods prohibited.During the proceedings, no one appeared on behalf of the appellant, while Shri Ahibaran, ld. Addl. Commissioner (AR), represented the Revenue and reiterated the findings of the impugned order. Upon careful consideration, the Tribunal noted that the confiscation of the goods was based on the grounds that the brand of the footwear was registered in India, but the goods were manufactured in China. As per the Notification, the country of origin needed to be mentioned on the package, which the appellant had failed to do initially.However, it was observed that the appellant intended to rectify the omission by affixing 'Made in China' on the packages in their factory and obtaining a certificate from the excise authority, which was denied by the Customs Authority. The Tribunal acknowledged that the appellant had no malicious intent in not affixing the country of origin and was willing to comply once the requirement was realized. It was also noted that the appellant did not gain unduly from the non-compliance. Despite the violation of the notification's condition, considering the circumstances and lack of malice, the Tribunal decided to show leniency by reducing the redemption fine from Rs. 3.5 lakhs to Rs. 1 lakh and the penalty from Rs. 75,000 to Rs. 25,000.Ultimately, the appeal was partly allowed in favor of the appellant, with the Tribunal pronouncing the order on 2-1-2017.