2019 (12) TMI 570 - AT - Customs

Tribunal Overturns Customs Act Penalties, Grants Appeal with Consequential Benefits.

Shri Anil Kapani Versus Commissioner of Customs (Port), Kolkata.

The Tribunal set aside the confiscation of goods and penalties under Sections 112(a), 112(b), and 114AA of the Customs Act. The appeal was allowed with ... Confiscation - penalty - import of lead acid rechargeable batteries - import in the name of others IEC number - restricted item or prohibited item - DRI alleged that Rule 6 of the Batteries (Management and Handling) Rules 2001 notified under Environment (Protection) Act 1986 was not met since the importer did not have registration with the Ministry of Environment and Forests or an agency designated by it - HELD THAT:- It is an admitted fact that there is no case of duty evasion or undervaluation of goods or that the CTH declared in the Bill of Entry is incorrect. It is also an admitted fact that the Bill of Entry was filed by M/s Sky Traders which had a valid and functioning IEC Code issued by the DGFT. The goods were admittedly cleared from Kolkata Port on 14.05.2016 and booked for delivery at the premises of M/s Sky Traders at 212, Usha Kiran Building, 2nd floor, Azadpur, Delhi- 110033, but were intercepted in New Delhi by DRI on 18.05.2016 - It is also an admitted fact that the DRI visited the premises of IEC Holder M/s Sky Traders but did not find the IEC Holder there, while the Appellant herein, Shri Anil Kapani visited DRI(HQ) and claimed ownership of the goods. If the foreign supplier or Kolkata Customs officials had informed the Appellant or IEC Holder regarding this, a correction could have been done under Section 149 of the Customs Act 1962 by amending the documents since nothing turns on such an error because no advantage would have fallen upon the Appellant or IEC Holder as this is a purely technical and clerical issue since Registration Certificate from Ministry of Environment and Forests is easy to obtain by submitting the documents as required under the Standard Operating Procedure for Grant, Renewal or Cancellation of registration to the Importers of New Lead Acid Batteries under Rule 5 of the Batteries (Management and Handling) Rules and also that description of goods in the Bill of Entry is based on Invoice and Packing List prepared by the supplier which admittedly was rechargeable batteries, therefore the Appellant or IEC Holder cannot be faulted. Confiscation of goods under Section 111(d) of the Customs Act 1962 cannot be sustained since lead acid rechargeable batteries are not prohibited, but restricted and can be imported with Registration Certificate of the Ministry of Environment and Forests which was admittedly obtained from Central Pollution Control Board, Delhi and which is to be seen from the time of import - Once confiscation of goods cannot be sustained, penalty under Section 112(a) and/or 112(b) cannot be imposed on the Appellant since penalty under Section 112 is contingent on confiscation of goods under Section 111 of the Customs Act 1962. The question of imposing penalty under Section 114AA of the Customs Act 1962 does not arise as far as the Appellant herein is concerned since Section 114AA can be invoked only in case of use of any false document, statement or declaration made intentionally for import transactions and not for using IEC of some other person. Appeal allowed - decided in favor of appellant. Issues Involved:1. Confiscation of goods under Section 111(d) of the Customs Act.2. Imposition of Redemption Fine.3. Penalty under Sections 112(a)(i) & 112(b)(i) of the Customs Act.4. Penalty under Section 114AA of the Customs Act.5. Alleged violation of Section 7 of the Foreign Trade (Development & Regulation) Act, 1992.6. Alleged use of forged documents to obtain IEC.Issue-wise Detailed Analysis:1. Confiscation of Goods under Section 111(d) of the Customs Act:The Tribunal examined whether the goods were liable for confiscation under Section 111(d). It was acknowledged that there was no case of duty evasion, undervaluation, or incorrect classification of goods. The Bill of Entry was filed by M/s Sky Traders, which had a valid IEC Code. The consignment, including rechargeable batteries, was cleared by Kolkata Port Customs and later intercepted by DRI in Delhi. The rechargeable batteries were found to be of the lead acid variant, requiring registration with the Ministry of Environment and Forests, which was obtained post-import. The Tribunal found that the Appellant was unaware of the specific type of batteries and acted in good faith. The goods should not have been confiscated since the necessary registration was obtained shortly after the interception.2. Imposition of Redemption Fine:The Tribunal noted that the confiscation of goods under Section 111(d) was not justified. Consequently, the imposition of a Redemption Fine of Rs. 4,50,000/- was also deemed unwarranted.3. Penalty under Sections 112(a)(i) & 112(b)(i) of the Customs Act:The Tribunal found that penalties under Sections 112(a)(i) & 112(b)(i) are contingent upon the confiscation of goods under Section 111. Since the confiscation was not sustained, the penalties of Rs. 4,00,000/- imposed by the Commissioner (Appeals) were set aside.4. Penalty under Section 114AA of the Customs Act:The Tribunal held that Section 114AA pertains to the use of false documents or declarations made intentionally. The Appellant did not knowingly use false documents; the error was technical and clerical. The penalty of Rs. 4,50,000/- under Section 114AA was thus set aside, referencing the decision in Suketu Jhaveri vs Commissioner of Customs (Import) Nhava Sheva.5. Alleged Violation of Section 7 of the Foreign Trade (Development & Regulation) Act, 1992:The Tribunal considered the Appellant's argument that the import was made under a valid IEC Code issued to M/s Sky Traders. The Tribunal agreed that the Appellant was covered by Section 2(26) of the Customs Act, which includes any owner or beneficial owner as an importer. Thus, there was no violation of Section 7 of the Foreign Trade (Development & Regulation) Act.6. Alleged Use of Forged Documents to Obtain IEC:The Tribunal found that the conclusion of forgery was based on assumptions since the premises of M/s Sky Traders were closed during the DRI visit. There was no concrete evidence of forgery, and M/s Sky Traders had not alleged any forgery by the Appellant.Conclusion:The Tribunal set aside the confiscation of goods and penalties under Sections 112(a), 112(b), and 114AA of the Customs Act. The appeal filed by the Appellant was allowed with consequential benefits, emphasizing that the Appellant acted in good faith and rectified the error promptly upon discovery. The decision was pronounced in the Open Court on 18th November 2019.