2009 (10) TMI 370 - AT - Customs

Tribunal Upholds Rs.5.00 Lakh Penalty for Goods Misdeclaration

The Tribunal upheld a penalty of Rs.5.00 lakhs on the Importing Firm for misdeclaration of goods under the Customs Act. Penalties on individual appellants ... Penalty under Section 112 of the Customs Act for misdeclaration - Confiscation and destruction of imported goods - Liability of proprietor and agent for misdeclared imports - Liability of Customs House Agent for connivance in misdeclaration - Reduction of penalty on assessment of involvement and conductPenalty under Section 112 of the Customs Act for misdeclaration - Confiscation and destruction of imported goods - Penalty imposed on the importing firm, M/s. Irma Impex, was examined and upheld. - HELD THAT: - The goods imported by M/s. Irma Impex were found to be misdeclared as to value and quantity and some consignments were adjudged counterfeit/misbranded and destroyed; the confiscation itself was not challenged before the Tribunal. Penalties were imposed under Section 112 of the Customs Act for violations of the Customs Act read with other statutes and rules. Having regard to those findings and the absence of successful challenge to confiscation, the Tribunal found no ground to reduce the penalty levied on the importing firm. [Paras 7]Penalty of Rs.5.00 lakhs imposed on M/s. Irma Impex is upheld.Liability of proprietor and agent for misdeclared imports - Reduction of penalty on assessment of involvement and conduct - Penalties on Shri Sunil Dharewa and Shri Pankaj Dugar were reconsidered and reduced to the same amount as that imposed on the importing firm. - HELD THAT: - The Tribunal accepted the factual finding that Shri Sunil Dharewa, husband of the proprietor, managed the day to day affairs of the importing concern and that Shri Pankaj Dugar worked on behalf of the importer and had placed orders for the goods, while Shri Dharewa admitted investing a sum in the imports. On that basis the Tribunal held both individuals liable for penalties equivalent to that of the importing firm, but reduced their individual penalties to the penalty quantum imposed on M/s. Irma Impex. [Paras 7]Penalties on Shri Sunil Dharewa and Shri Pankaj Dugar reduced to Rs.5.00 lakhs each.Liability of Customs House Agent for connivance in misdeclaration - Evidence required to sustain penalty for connivance - Penalty imposed on the Customs House Agent (CHA) firm was quashed for lack of evidence of connivance in misdeclaration. - HELD THAT: - The impugned adjudication noted discrepancy between declared brand names in the bill of entry and absence of brand names in the invoice and packing list, indicating CHA awareness of consignments. However, the Tribunal found no material or evidence demonstrating that the CHA had connived with the importer or acted with intent to evade duty or otherwise violated statutory provisions. In absence of evidence of connivance or active participation in the misdeclaration, the statutory penalty could not be sustained against the CHA. [Paras 8]Penalty on the CHA firm (M/s. Bad Organisation) is set aside.Final Conclusion: The Tribunal upheld the penalty on the importing firm, reduced and equalised penalties on two individuals associated with the firm to the same quantum as the firm, and set aside the penalty on the CHA for lack of evidence of connivance; the appeals are disposed accordingly. Issues:Challenging penalties imposed under the Customs Act.Analysis:The case involved four appellants challenging penalties imposed under the Customs Act for misdeclaration of goods, including cosmetics, in terms of quantity and value, violating various acts and rules. The goods were either confiscated or ordered for destruction due to being counterfeit, spurious, or misbranded. The Revenue alleged that the import was made by a Proprietory Concern in the name of the wife of one appellant, who was conducting the business. A penalty was also imposed on a CHA Firm. The appellants contended that wrong consignments were sent by the exporter, producing evidence to support their claim and seeking leniency in penalties due to the destruction of a majority of the goods.The appellants argued that the CHA Firm had no involvement in misdeclaration and should not be penalized. They stated that the CHA Firm filed bills of entry as per instructions and documents provided by the importer. The Revenue, however, maintained that the goods were misdeclared and spurious, justifying the penalties imposed on the appellants.The Tribunal upheld the penalty of Rs.5.00 lakhs on the Importing Firm, finding them liable for misdeclaration. Regarding the penalties on individual appellants, it was noted that one was the husband of the Importing Firm's proprietor and was involved in day-to-day affairs, while the other worked on behalf of the importer. Their penalties were reduced to match the Importing Firm's penalty. In the case of the CHA Firm, the Tribunal found no evidence of connivance with the importer to evade duty payment. As there was no proof of violation of customs provisions, the penalty on the CHA Firm was set aside. The appeals were disposed of accordingly.