2019 (4) TMI 1443 - AT - Customs

Tribunal reduces penalties for misdeclaration of imported goods under Customs Act

The Tribunal reduced the penalties imposed on the Managing Director and General Manager for misdeclaration of imported goods under section 112 of the ... Imposition of penalty on Managing Director - mis-declaration of imported goods - HELD THAT:- The goods were imported by a unit operating under a special scheme framed to showcase best practices and while enabling industrial growth in circumstances of minimal intervention. The ‘double lock bond’ regulated the deployment of imported goods in the operations of the unit and ensured that such privileged goods was utilized exclusively for the intended purpose. In the present instance, it is not anybody’s case that the goods have been diverted or intended to be; on the contrary, it would appear that the claim of the appellants of lack of motive was discarded on the finding of benefits derived from transacting in foreign exchange - Notwithstanding this, the culmination of penalty under section 112 of Customs Act, 1962 commenced from confiscation of the goods as a consequence of admitted mis-declaration in which the motives are not relevant. The benefits that may have accrued to the appellants through misuse of foreign exchange transactions was brought to nought and as the misdemeanour is limited to the act of mis-declaration, the penalty on Shri Hemrajani be reduced to ₹ 5,00,000 and that on Ms Veena Mishra to ₹ 1,00,000 - appeal allowed in part. Issues:Imposition of penalty under section 112 of Customs Act, 1962 on Managing Director and General Manager for misdeclaration of imported goods.Analysis:The judgment involved appeals by the Managing Director and General Manager of a company charged with misdeclaration of imported goods, specifically 'integrated circuit chips'. The goods were found to contain dummy, fake, or overvalued pieces upon examination. The adjudicating authority confiscated the goods under section 111 (d) and section 111 (m) of Customs Act, 1962, and imposed penalties under section 112. The Managing Director and General Manager were penalized with amounts of Rs. 20,00,000 and Rs. 15,00,000, respectively.The appellants contended that the Managing Director was not directly involved in day-to-day transactions or imports, and no statements implicated him. They argued that the scheme of Export Processing Zones prevented misuse of imported goods and that this was a singular mistake among many consignments. The General Manager claimed she only became aware of the discrepancy during examination and did not stand to benefit from the imports.The appellants cited previous Tribunal decisions and highlighted the lack of mens rea in the case. The Authorized Representative argued that the penalties were justified based on the findings of the adjudicating authority and the importer's implied admission of the offense. The Tribunal deliberated on the relevance of mens rea in imposing penalties under section 112, referencing the Supreme Court decision in Pine Chemical Suppliers case.The Tribunal found that while the appellants' pleas did not warrant altering the findings, mens rea could impact the penalty amount. As the benefits from foreign exchange transactions were nullified and the misdeed was limited to misdeclaration, the penalty on the Managing Director was reduced to Rs. 5,00,000 and that on the General Manager to Rs. 1,00,000.In conclusion, the Tribunal disposed of both appeals with a common order, reducing the penalties imposed on the Managing Director and General Manager due to the limited scope of their involvement and the absence of significant benefits derived from the misdeclaration.