Counterfeit goods confiscated after appellant abandoned them, claiming no ownership or order placed

CESTAT New Delhi upheld absolute confiscation of counterfeit goods after appellant abandoned them, claiming they never belonged to him and he had not placed any order. The appellant's subsequent attempt to reclaim goods was deemed impermissible. For remaining goods, the tribunal accepted valuation under Rule 9 through market survey with 60% abatement, but reduced redemption fine from full value to a lesser amount as the original fine equal to goods' value was harsh. Penalty under sections 114A and 114AA was set aside, with penalty under section 112(a) reduced to Rs. 9,00,000. Appeal partially allowed.

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Issues Involved:
1. Absolute confiscation of branded counterfeit goods.
2. Rejection of the transaction value of the remaining goods under Rule 12 and re-determination under Rule 9 of the Valuation Rules.
3. Confiscation of goods under Section 111(l) and 111(m) of the Customs Act, 1962.
4. Imposition of penalty on the appellant under Section 112(a), Section 114A, and Section 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Absolute Confiscation of Branded Counterfeit Goods:
The appellant had categorically abandoned the branded counterfeit goods and waived the show cause notice and personal hearing. The right holders confirmed that the goods were counterfeit. The Commissioner confiscated them under Section 111(d) of the Customs Act, 1962, which allows confiscation for goods imported contrary to any prohibition imposed under the Act or any other law for the time being in force. The appellant consistently maintained that these branded goods did not belong to him and were sent by mistake by the Chinese supplier. Therefore, the absolute confiscation of the counterfeit goods was sustained.

2. Rejection of the Transaction Value and Re-determination Under Rule 9:
The declared value in the Bill of Entry was for goods described therein, but the actual imported goods were different in quality and quantity. The Commissioner had reasonable doubt to reject the transaction value under Rule 12 of the Customs Valuation Rules. Since values of identical or similar goods were not available, the valuation was conducted under Rule 9 (Residual Method). A market survey was conducted in the presence of the appellant, and values were determined with a 60% abatement for duty and profit margin. The appellant did not contest the proposals in the show cause notice nor presented any contrary evidence. Thus, the Commissioner correctly rejected the transaction value and re-determined it under Rule 9.

3. Confiscation Under Section 111(l) and 111(m):
The goods were mis-declared in terms of description, quantity, and valuation. The Commissioner held that by not making the correct declaration in the Bill of Entry, the appellant violated Section 46, making the imported goods liable for confiscation under Section 111(l) and 111(m) of the Customs Act, 1962. The confiscation of these goods was upheld, but the redemption fine was reduced to Rs. 16,54,989/- for goods at serial no. 1 to 10 and Rs. 1,14,299/- for goods at serial no. 11 of table 9.

4. Imposition of Penalty:
The Commissioner imposed a penalty of Rs. 94,51,763/- under Section 112(a) read with Section 114A and Section 114AA of the Customs Act, 1962. However, no breakup was provided for the amount imposed under the three sections. Section 114A provides for penalty but prohibits additional penalties under Section 112. Section 114AA penalizes false declarations, but the appellant's intention or knowledge was not clearly established. Therefore, penalties under Section 114A and 114AA were set aside, and the penalty under Section 112(a) was reduced to Rs. 9,00,000/-.

Final Order:
1. Absolute confiscation of the counterfeit goods under Section 111(d) was upheld.
2. Confiscation of other goods under Section 111(l) and 111(m) was upheld, but the redemption fine was reduced.
3. Demand of differential customs duty was upheld.
4. Penalty under Section 112(a) was reduced to Rs. 9,00,000/-.
5. Penalties under Section 114A and 114AA were set aside.
6. The appellant is entitled to consequential relief, if any.

(Order pronounced on 22.08.2024)

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