Deliberate undervaluation and double invoicing sustain customs duty demand and penalty, but redemption fine was set aside after clearance.

Deliberate undervaluation proved by double invoicing and undeclared remittance justified duty demand and penalty, because the declared invoice value did not reflect the true transaction value and the misdeclaration attracted confiscability under Section 111(m) of the Customs Act, 1962. The duty demand and penalty were upheld. However, although the goods had already been cleared, redemption fine was not warranted on the facts and was therefore set aside under Section 125(1). The appeal thus succeeded only in part, with the fiscal consequences sustained but the monetary redemption fine annulled.

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Issues: (i) whether the imported goods were liable to duty demand and penalty on account of undervaluation and misdeclaration of value; (ii) whether redemption fine was sustainable after the goods had already been cleared.

Issue (i): whether the imported goods were liable to duty demand and penalty on account of undervaluation and misdeclaration of value.

Analysis: The evidence of enquiry by the Hong Kong Customs authorities showed a double invoicing arrangement and payment of the undeclared portion through telegraphic transfer. This established that the declared invoice value did not reflect the true transaction value and that the understatement was deliberate for evasion of customs duty. The finding of misdeclaration also attracted confiscability under Section 111(m) of the Customs Act, 1962.

Conclusion: The duty demand and penalty were upheld and no interference was called for.

Issue (ii): whether redemption fine was sustainable after the goods had already been cleared.

Analysis: Although the goods had been cleared, the imposition of redemption fine was not warranted in the facts of the case in view of the precedent relied upon on behalf of the appellant. The confiscation-related consequence was therefore not maintained to the extent of monetary redemption fine under Section 125(1) of the Customs Act, 1962.

Conclusion: The redemption fine was set aside.

Final Conclusion: The appeal succeeded only in part: the duty demand and penalty were sustained, while the redemption fine was annulled.

Ratio Decidendi: Deliberate undervaluation proved by evidence of double invoicing and undeclared remittance justifies duty demand and penalty, but redemption fine may be set aside where the facts do not support its continuation after clearance of the goods.

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