2026 (3) TMI 516 - AT - Customs

Misdeclaration of export particulars permits confiscation of misdeclared goods, but duty-paid liberalised import gold avoids automatic confiscation.

Misdeclaration of exported jewellery in the shipping bill attracts confiscation for goods entered for exportation that do not correspond with the declared ... Confiscation of gold ornaments exported with misdeclared gold under Section 113(i) - Non-export of the jewellery made from 5 kgs of duty free gold purchased by the appellant from MMTC Ltd. as per the said ‘20:80 Import of Gold Scheme’ - procedure prescribed under the Scheme vide Circular No.34/2013-Cus, - Redemption on payment of fine and reduction of penalty under Section 114 Confiscation for misdeclaration under Section 113(i) - HELD THAT:- The Court found that the shipping bill declared 5,268.600 gms of gold in the exported consignment while assay showed materially lower gold content (2,733.34 gms) with the balance being enamel, and the appellant admitted the misdeclaration. Such misdeclaration falls within the scope of Section 113(i). Confiscation of the 244 gold bangles under Section 113(i) is sustained. Applicability of Section 111(o) to duty free imported gold not exported under the 20:80 scheme - Confiscation of gold ornaments recovered (1607.820 gms) and unrecovered gold (1036.84 gms) under Section 111(o) - HELD THAT:- The Court held that Section 111(o) applies to goods exempted subject to conditions where the condition is not observed and the goods are thus prohibited or conditionally exempted; the gold imported under the liberalized 20:80 scheme, even if not exported, is at best liable to duty under the Scheme and cannot be treated as prohibited goods for confiscation under Section 111(o). Consequently, confiscation of the recovered and unrecovered gold under Section 111(o) cannot be sustained. [Paras 11] Confiscation of the recovered and unrecovered gold under Section 111(o) is not sustained and is set aside. Redemption on payment of fine and reduction of penalty under Section 114 - HELD THAT:- While penal consequences are justified for the appellant's intentional misdeclaration, the Court applied established principles limiting absolute confiscation of non prohibited goods without an opportunity to redeem. The Court directed redemption of the confiscated 244 bangles on payment of a fine equal to 10% of their value and reduced the penalty under Section 114 to a specified lesser amount; other penalties and confiscations founded on inapplicable provisions were set aside. [Paras 12] Appellant permitted to redeem the 244 bangles on payment of a fine of 10% of their value; penalty under Section 114 reduced and other confiscations and penalties set aside. Final Conclusion: The appeal is partly allowed: confiscation of the 244 gold bangles under Section 113(i) is sustained but redeemable on payment of a 10% fine and the Section 114 penalty is reduced; confiscation under Section 111(o) and other penalties are set aside. Issues: (i) Whether confiscation of 244 gold bangles exported with misdeclared gold content is justified under Section 113(i) of the Customs Act, 1962; (ii) Whether confiscation of gold ornaments recovered from the appellant and unrecovered gold can be sustained under Section 111(o) of the Customs Act, 1962 in the context of the 20:80 Import of Gold Scheme (Circular No.34/2013-Cus dated 04.09.2013); (iii) Whether penalties imposed under Sections 112(b), 114 and 114AA of the Customs Act, 1962 are sustainable and whether redemption on payment of fine is permissible.Issue (i): Whether confiscation of 244 gold bangles attempted to be exported with a misdeclaration of gold content is justified under Section 113(i) of the Customs Act, 1962.Analysis: The appellant declared 5268.600 gms of gold in the shipping bill but export examination showed gold content of 2733.34 gms with balance filled with enamel. The appellant admitted misdeclaration in his statement. Section 113(i) covers goods entered for exportation which do not correspond in value or in any material particular with the entry made for export. The record shows attempted export with materially incorrect declaration of quantity and value.Conclusion: Confiscation of the 244 gold bangles under Section 113(i) of the Customs Act, 1962 is justified.Issue (ii): Whether confiscation of 22ct gold ornaments recovered from the appellant and confiscation of unrecovered gold (1036.84 gms) is sustainable under Section 111(o) of the Customs Act, 1962 given the 20:80 Import of Gold Scheme and subsequent discharge of duty by the nominated agency.Analysis: Section 111(o) applies to goods exempted subject to condition where the condition is not observed. The 20:80 Scheme (Circular No.34/2013-Cus dated 04.09.2013) provides that failure to export jewellery within the prescribed period requires the nominated agency to deposit duty (Clause 4(xv)); the nominated agency in this case discharged duty with interest. The gold so imported and subject to duty is not treated as prohibited goods; the statutory consequence under the Scheme is duty payment by the nominated agency rather than automatic confiscation under Section 111(o) where the condition relates to liberalized import for export.Conclusion: Confiscation of the 22ct gold ornaments recovered from the appellant and of the unrecovered 1036.84 gms under Section 111(o) is not sustainable and is set aside.Issue (iii): Whether penalties under Sections 112(b), 114 and 114AA of the Customs Act, 1962 should be upheld and whether redemption of confiscated goods on payment of fine is permissible.Analysis: Given the appellant's admitted misdeclaration, penalty provisions are attractable in principle. However, established principles limit absolute confiscation of non-prohibited goods without an opportunity for redemption. The facts permit imposition of a reduced monetary sanction and allow redemption by payment of fine rather than absolute forfeiture. The Tribunal considered proportionality and precedents in reducing monetary penalties and permitting redemption.Conclusion: Penalties under Sections 112(b) and 114AA are set aside. The penalty under Section 114 is reduced to Rs.1,00,000 and the appellant is permitted to redeem the 244 gold bangles on payment of fine equal to 10% of the value (Rs.7,20,000). Appeal is partly allowed.Final Conclusion: The misdeclaration in the shipping bill warrants confiscation under Section 113(i) but other confiscations under Section 111(o) and most penalties are not sustainable in the circumstances; the nominated agency's payment of duty pursuant to Circular No.34/2013-Cus resolves the duty liability, and equitable monetary relief (fine and reduced penalty) is ordered in place of absolute confiscation.Ratio Decidendi: Misdeclaration of export particulars attracts confiscation under Section 113(i) of the Customs Act, 1962; where duty on liberalized import-for-export gold has been discharged by the nominated agency under Circular No.34/2013-Cus dated 04.09.2013 (Clause 4(xv)), confiscation under Section 111(o) is not appropriate and equitable redemption by payment of a reasonable fine and reduction of penalty is permissible for non-prohibited goods.