2005 (9) TMI 99 - HC - Customs

Appeal Dismissed: Court Finds No Willful Misdeclaration by Importer, Upholds Correct Declaration of Goods.

The High Court dismissed the appeal, agreeing with the Tribunal's decision to set aside the Commissioner's Order-in-Original, which had found the importer ... Invocation of extended period of limitation as provided under the Customs Act, 1962 particularly in view of the fact that the Respondent had made misdeclaration for claiming benefits of Notification No. 11/97, dated 1-3-97 - levy of penalty under Section 114A of the Customs Act when duty was short levied due to mis-declaration - wilful mis-declaration of goods under reference and wrongful availment of the benefit of N/N. 11/97-Cus., dated 1-3-97 - HELD THAT:- Having examined the factual scenario and the law laid down by the Apex Court in the case of NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS & CENTRAL EXCISE [1998 (7) TMI 91 - SUPREME COURT], we are of the view that even if the declaration made by the respondent-assessee with regard to the claim for exemption in payment of duty therein and that the respondent was entitled to exemption under Notification No. 11/97-Cus., the respondent did not commit any wrong. It cannot be said to be a case of misdeclaration. In that view of the matter, there is no wilful suppression of facts or wilful misdeclaration by the respondent-assessee. Consequently, the Tribunal was justified in taking a view that the demand was barred by limitation. In that view of the matter, the Commissioner of Customs was not justified in invoking the extended period of limitation holding that the importer i.e., respondent herein was liable to pay penalty under Section 114A of the Customs Act. Appeal dismissed. Issues:1. Invocation of extended period of limitation under the Customs Act for misdeclaration of goods.2. Liability of importer for penalty under Section 114A of the Customs Act due to misdeclaration.3. Setting aside of the Order-in-Original by the Tribunal based on misdeclaration of goods.Analysis:Issue 1:The case involved the invocation of the extended period of limitation under the Customs Act for misdeclaration of goods to claim benefits under Notification No. 11/97. The officers received information about misuse of the notification as certain goods were not eligible for the concessional rate of duty. Samples were tested, and opinions were obtained confirming the misdeclaration. The respondent was accused of misdeclaration in importing Nylon Tricot Flocking Fabrics as 'Insole Sheets.' The Commissioner upheld the charges, but the Tribunal set aside the order citing limitation. The appellant argued that a claim for exemption found untenable amounts to misdeclaration, but the respondent contended that mere mention of a wrong notification does not constitute misdeclaration.Issue 2:The question of the importer's liability for penalty under Section 114A of the Customs Act due to misdeclaration was raised. The appellant argued that misdeclaration of goods enables the department to extend the period of limitation, justifying the penalty. However, the respondent maintained that there was no misdeclaration as the goods were declared correctly, albeit with a wrong notification for exemption. The respondent cited a Supreme Court judgment to support the argument that honest mistakes in declarations do not constitute misdeclaration under the Act.Issue 3:The Tribunal set aside the Order-in-Original by the Commissioner, which held the importer guilty of willful misdeclaration and wrongly availing benefits under the notification. The respondent argued that there was no misdeclaration as the goods were correctly declared, and reliance was placed on a circular and a Tribunal judgment supporting the contention that misdeclaration regarding exemption does not imply guilt of suppression. The High Court agreed with the respondent, finding no wilful misdeclaration or suppression of facts, leading to the dismissal of the appeal and no costs awarded.This detailed analysis of the judgment highlights the key issues of misdeclaration of goods, liability for penalty, and the Tribunal's decision to set aside the original order based on misdeclaration allegations.