1987 (2) TMI 254 - AT - Customs

Tribunal upholds Customs Act penalty for misdeclaration, clarifies confiscation rules.

The Tribunal upheld the legality of the confiscation of goods and penalty imposed under the Customs Act, 1962. It ruled that confiscation can apply even ... Expression “goods brought from a place outside India” differentiable from “imported goods” Issues:1. Legality of confiscation of goods2. Penalty imposed under Customs Act, 1962Analysis:Issue 1: Legality of Confiscation of GoodsThe case involved a consignment of Tanzanian Gum Arabic imported by the Appellant, where 395 bags were seized from the warehouse due to alleged undervaluation. The Collector of Customs directed the confiscation of the goods subject to redemption on payment of a fine and levied a penalty along with the difference in duty. The Appellant challenged the legality of the confiscation and penalty imposed.The Appellant argued that once goods are cleared after payment of duty, they cease to be 'imported goods' as defined in the Customs Act, and therefore, Section 111 regarding confiscation should not apply. Additionally, the Appellant contended that confiscation and penalty under Sections 111 and 112 of the Act should not be applicable to goods cleared for home consumption.However, the Tribunal rejected the Appellant's arguments, emphasizing that Section 111 of the Act does not use the term 'imported goods' but refers to goods brought from outside India. The Tribunal clarified that the definition of 'imported goods' includes goods cleared for home consumption. The Tribunal highlighted that misdeclaration of value before clearance makes the goods liable for confiscation even after clearance, as the act of misdeclaration remains an offense.Moreover, the Tribunal explained that confiscation is an act of appropriation of private property for state use, and it is applicable regardless of clearance. The Tribunal cited legal precedents to support the view that liability to confiscation persists even after clearance, and the powers of search, seizure, and inspection are crucial to enforcing such liabilities.Issue 2: Penalty Imposed under Customs Act, 1962The Appellant argued that as Section 28 of the Act deals with the recovery of short-levied duties and does not mention confiscation, the imposition of a penalty was unwarranted. The Appellant contended that a short-levy does not necessarily lead to confiscation.The Tribunal disagreed with the Appellant's interpretation, stating that the power to recover short-levied duties does not preclude the possibility of confiscation. The Tribunal clarified that liability to confiscation exists independently of duty recovery provisions, and misdeclaration leading to short-levy can still result in confiscation.In conclusion, the Tribunal held that the confiscation of goods and the penalty imposed were legal and within the jurisdiction of the Customs Act. The Tribunal dismissed the appeal, ruling against the Appellant's arguments and upholding the decision of the Collector of Customs regarding the confiscation and penalty.This comprehensive analysis of the judgment highlights the key legal arguments, interpretations of relevant sections of the Customs Act, and the Tribunal's reasoning behind affirming the legality of the confiscation and penalty imposed in the case.