2018 (11) TMI 625 - AT - Customs

Tribunal Upheld Customs Act Confiscation, Revised Penalties

The Tribunal upheld the confiscation under section 111(d) of the Customs Act, 1962, for importing garments without a required license. It reduced the ... Confiscation under section 111(d) - confiscation under section 111(m) - redemption fine - market survey for valuation - remand for ascertainment of margin of profit - release of confiscated goods contingent upon fine under section 125Confiscation under section 111(m) - declaration (bill of entry) - Invocation of section 111(m) in the absence of a declaration (bill of entry) - HELD THAT: - The Tribunal held that section 111(m) applies where material particulars are withheld or incorrectly recorded in the declaration, and for the purpose of section 111 the declaration is the bill of entry. Where proceedings were initiated before filing of the bills of entry, confiscation under section 111(m) could not be sustained because no declaration existed to found that provision's application. [Paras 4]Section 111(m) was not properly invoked in the absence of a declaration.Confiscation under section 111(d) - import licence requirement - Validity of confiscation under section 111(d) for import of old and serviceable garments without required licence - HELD THAT: - The Tribunal accepted that import of old and serviceable garments required an import licence under the Foreign Trade Policy and that want of such licence was admitted. Consequently, confiscation under section 111(d) for goods imported without the prescribed licence was sustained. The statutory scheme permitting confiscation in such circumstances was found to be in conformity with law. [Paras 5, 7]Confiscation under section 111(d) was upheld due to failure to comply with licensing requirements.Market survey for valuation - remand for ascertainment of margin of profit - Validity and procedural propriety of a market survey conducted over a decade after import to determine margin of profit and value - HELD THAT: - The Tribunal observed that a market survey conducted long after importation, and after the Tribunal's remand, was inconsistent with the remand direction which required disclosure to appellants of the margin of profit used to compute fine and penalty. The original authority failed to disclose the margin of profit as directed; attempting to rectify that deficiency by a belated market survey was held to be procedurally improper and not in conformity with the remand order. Nonetheless, there was no serious resistance to the ascertained value. [Paras 3, 5]The market survey undertaken ex post facto and after remand was procedurally improper for purposes of complying with the Tribunal's remand which required disclosure of the margin of profit.Redemption fine - release of confiscated goods contingent upon fine under section 125 - Whether to remit the matter again for fresh ascertainment or to decide on quantum of fine and penalty in view of paucity of evidence - HELD THAT: - Although ordinarily the failure to disclose the margin of profit would justify another remand, the Tribunal found paucity of evidence and negligible scope for effective fresh ascertainment at this stage. In the interests of justice, rather than ordering another remand, the Tribunal exercised its discretion to reduce the redemption fine and penalty. It noted that redemption fine cannot, as a matter of statute, exceed market price and that a survey per se is not improper, but practical considerations led to reduction. [Paras 7]Instead of a further remand, the redemption fine was reduced to 10% of the ascertained value and the penalty to 5%.Final Conclusion: Confiscation under section 111(m) quashed for lack of a declaration; confiscation under section 111(d) upheld for imports without required licence; belated market survey and failure to disclose margin of profit found procedurally improper but admitted value not seriously contested; in view of paucity of evidence the Tribunal declined further remand and reduced redemption fine to 10% and penalty to 5%. Issues involved:1. Validity of market survey conducted in 2007 for determining margin of profit in goods imported in 1996.2. Legality of ascertainment of assessable value through market survey not provided for in Customs Valuation Rules.3. Invocation of section 111(m) of Customs Act, 1962 for goods not corresponding with the entry.4. Confiscation under section 111(d) for import of garments without required license.5. Compliance with remand order directing disclosure of margin of profit.6. Questioning margin of profit and validity of market survey.7. Compliance with licensing requirements.Analysis:1. The judgment concerns nine appeals with identical issues arising from an order-in-original passed by the Commissioner of Customs. The dispute had been remanded previously for proper valuation of goods and notification of the margin of profit. Shri Anil Balani represented some appellants, challenging the imports of garments declared as 'pre-mutilated and fumigated.' The goods were found to be liable for confiscation and fines based on a market survey conducted in 2007.2. The appellants contested the validity of the market survey conducted in 2007 and the legality of determining the assessable value through a market survey not provided for in the Customs Valuation Rules. The authority argued that compliance with valuation rules was not necessary as the proceedings aimed to ascertain redemption fines and penalties, not duty liability.3. The judgment analyzed the invocation of section 111(m) of the Customs Act, 1962, for goods not corresponding with the entry. It noted that confiscation under section 111(d) was justified for importing garments without the required license under the Foreign Trade Policy.4. The Tribunal found that proceedings initiated before the filing of bills of entry did not align with the confiscation under section 111(m) requirements. It emphasized that confiscation under section 111(d) for importing garments without a license was valid, and the redemption fine should not exceed the market price of goods.5. The Tribunal highlighted the failure of the original authority to disclose the margin of profit as directed in the remand order. Despite questioning the margin of profit and the market survey's validity, the appellants did not resist the ascertained value.6. Due to the lack of evidence and limited scope for further ascertainment, the Tribunal upheld the confiscation under section 111(d) but reduced the redemption fine and penalty percentages to serve the ends of justice. The judgment concluded by disposing of the appeals with the revised penalties.This detailed analysis covers the issues involved in the legal judgment comprehensively, addressing each point raised in the case.