Bona fide import declaration based on supplier documents may still amount to misdeclaration, but confiscation and penalty require culpability.

A bona fide declaration based on supplier documents did not preclude a finding of misdeclaration where examination showed that only part of the consignment matched the declared description. However, confiscation was unsustainable because the record did not establish concealment or the requisite culpability for penal consequences. On that basis, the penalty was also set aside. The redemption fine was reduced in view of the limited basis for interference and the surrounding circumstances of the declaration and examination.

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Issues: (i) Whether the declaration of the consignment as wool waste was a misdeclaration justifying confiscation of the ten bales found to contain wool waste; (ii) Whether penalty was leviable where the importer acted on the supplier's invoice and test report; (iii) Whether the redemption fine required reduction.

Issue (i): Whether the declaration of the consignment as wool waste was a misdeclaration justifying confiscation of the ten bales found to contain wool waste.

Analysis: The consignment was declared as wool waste, but examination showed that ten bales contained wool waste and the remaining bales contained synthetic waste. The declaration was therefore not consistent with the actual contents. At the same time, the finding did not support the conclusion that the ten wool bales were used to conceal the rest of the consignment.

Conclusion: Misdeclaration was established, but confiscation of the ten bales was not sustainable and was set aside.

Issue (ii): Whether penalty was leviable where the importer acted on the supplier's invoice and test report.

Analysis: The declaration was made on the basis of the supplier's documents, which showed substantial wool content. The conduct was treated as bona fide, and the record did not justify penal action.

Conclusion: Penalty was not sustainable and was set aside.

Issue (iii): Whether the redemption fine required reduction.

Analysis: In view of the circumstances in which the declaration was made and the limited basis for confiscation, the quantum of fine called for interference.

Conclusion: The redemption fine was reduced to Rs. 45,000/-.

Final Conclusion: The assessee obtained partial relief: confiscation of the ten bales was set aside, the penalty was annulled, and the redemption fine was reduced.

Ratio Decidendi: Where an importer's declaration is made bona fide on the basis of supplier documents, misdeclaration may still be found from the actual examination of the goods, but confiscation and penalty cannot be sustained unless the surrounding facts establish the requisite culpability and concealment.

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