2005 (7) TMI 260 - AT - Customs

Tribunal Upholds Duty Demand and Confiscation; Reduces Penalties for Saheli Synthetics Due to Mitigation Factors.

The Tribunal confirmed the duty demand of Rs. 42,31,027 against M/s. Saheli Synthetics Pvt. Ltd. and upheld the confiscation of excess and declared goods. ... Penalty - Misdeclaration in the quantity of the fabrics - Confiscation of goods used for concealing - deposit of duty before the show cause notice - demand duty - HELD THAT:- The intention on the part of the appellant to evade can be inferred without any hesitation from the fact that there was mis-declaration in the quantity of the fabrics, which fact also stands accepted by Shri Ratan Goel. In such a situation they are required to be met with penalty and cannot be allowed to go scot-free on the mere ground that, on being pointed out they deposited the duty. The ratio of the Allahabad High Court decision in the case of Pee Aar Steels (P) Ltd.[2004 (4) TMI 85 - HIGH COURT OF JUDICATURE AT ALLAHABAD] is that imposition of penalty has nothing to do with the timing of the show cause notice. As such, we are of the view that penalty has been rightly imposed upon M/s. Saheli Synthetics Pvt. Ltd. However, keeping in view the fact of deposit of duty before the show cause notice and considering the same as a mitigating factor, we reduce the penalty from Rs. 15 lakhs to Rs. 7.5 lakhs. As regards confiscation of the excess found goods, the appellant have not contested their liability to confiscation. Accordingly, we uphold the same. However in the facts and circumstances of the case, we reduce the redemption fine from Rs. 20 lakhs to Rs. 7.5 lakhs. As regards confiscation of the declared quantity of fabrics, we take note of the Tribunal's decision in the case of Ashoka Traders v. Collector of Customs [1988 (7) TMI 287 - CEGAT, BOMBAY]. The facts in the above decision are parallel to the facts in the present case. Thus, we uphold the confiscation of the declared quantity under the provisions of Section 119 of the Act, but reduce the redemption fine to Rs. 5 lakhs. Personal penalties on Shri Ratan Goel, it is seen that he was the person actively involved in importation of the excess quantity and was a ware of the said fact. He has also deposed in his statement that he was aware of the fact that it is an offence under the Customs Act. Thus, we are of the view that a separate penalty on Shri Ratan Goel should be upheld. However keeping in view, the overall facts and circumstances of the case we reduce the penalty from Rs. 5 lakhs to Rs. 2 lakhs. Penalty of Rs. 50,000/- on Shri Santraj Singh Megaj Singh Tanwar, we do not find any justifiable reason to impose penalty upon him inasmuch as in his very first statement he has deposed his unawareness about excess quantity. Even Shri Ratan Goel has admitted that apart from him no other person for their company was aware of the fact of excess importation. Thus, we set aside the personal penalty to Rs. 50,000/- upon Shri Santraj Singh Megaj Singh Tanwar. In a nutshell all the appeals are disposed of in the following manner :- i) Duty of Rs. 42,31,027/- is confirmed against M/s. Saheli Synthetics Pvt. Ltd., as not contested. (ii) Penalty of Rs. 15 lakhs imposed on M/s. Saheli Synthetics Pvt. Ltd. is reduced to Rs. 7.5 lakhs. (iii) Confiscation of excess found non-declared goods is upheld but redemption fine is reduced to Rs. 7.5 lakhs. (iv) Confiscation of declared fabrics is upheld under the provisions of Section 119 of the Customs Act, but redemption fine is reduced to Rs. 5 lakhs. (v) Penalty of Rs. 5 lakhs on Shri Ratan Kumar Ramvilas Goel is reduced to Rs. 2 lakhs. (vi) Penalty of Rs. 50,000/- on Shri Santraj Singh Megaj Singh Tanwar is set aside. Issues:- Confirmation of demand of duty against M/s. Saheli Synthetics Pvt. Ltd.- Imposition of personal penalties- Confiscation of goodsConfirmation of Demand of Duty:The appeals arose from an impugned order confirming a duty demand of Rs. 42,31,027 against M/s. Saheli Synthetics Pvt. Ltd. for importing excess polyester fabrics. The appellant, a 100% EOU engaged in garment manufacturing, declared a quantity in the Bill of Entry, but verification revealed an excess quantity. The Managing Director admitted the excess and paid the differential duty. The Tribunal upheld the duty demand as uncontested.Imposition of Personal Penalties:The appellant argued against penalties, citing precedents under the Central Excise Act. The Tribunal held that the duty payment before the show cause notice did not exempt them from penalties, as misdeclaration was established. The intention to evade duty was inferred from the misdeclaration, justifying penalties. The penalty on M/s. Saheli Synthetics Pvt. Ltd. was reduced from Rs. 15 lakhs to Rs. 7.5 lakhs considering the duty deposit as a mitigating factor.Confiscation of Goods:Regarding confiscation, the Tribunal upheld the confiscation of excess goods and declared fabrics. The appellant's argument that the declared fabrics could not conceal the excess was rejected. The redemption fine for excess goods was reduced to Rs. 7.5 lakhs, and for declared fabrics to Rs. 5 lakhs. Personal penalties on individuals involved were also addressed, with the penalty on the Managing Director reduced to Rs. 2 lakhs, and the penalty on the authorized signatory set aside.In conclusion, the Tribunal confirmed the duty demand, reduced penalties and redemption fines, upheld confiscation of goods, and adjusted personal penalties accordingly. The judgment highlighted the importance of accurate declarations and consequences for misdeclaration under the Customs Act, 1962.