TaxTMI 
TaxTMI 
2025 (9) TMI 1548
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.... 2299510 dt. 04.09.2022 & 2299525 dt. 04.09.2025 for clearance of goods declared as "Polyester Coated Fabric (Polymric Compound)". Upon detailed examination of the consignments by officers of DRI and testing of samples drawn from the consignments, it was found that the imported goods were mis-declared in respect of description and classification. After further investigation, a show cause notice was dated 15.04.2011 was issued to the appellant with the proposals to (i) reject the declared description, classification and assessable value in respect of the above said bills of entry No. 2214121 dt. 29.08.2022, 2299510 dt. 04.09.2022 and 2299525 dt. 04.09.2025 and re-determine the same as proposed in the show cause notice; (ii) demand differential duty of Rs. 90,03,347/- in terms of Section 28(4) of Customs Act, 1962 on the goods imported under bill of entry No. 2214121 dt. 29.08.2022, for which Out of Charge order was already given by the proper officer of Customs; (iii) confiscate the impugned imported goods for contravention of sections 111(l) and 111(m) of Customs Act, 1962; and (iv) impose penalties on the appellant under Section 112, 114A and 114AA ibid. 2.1 The description, cl....
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.... The appellant has preferred the present appeal assailing the impugned Order-in-Original No. 106063/2024 dated 05.04.2014 passed by the Commissioner of Customs, Custom House, Chennai II in so far as it relates to imposition of fine and penalty on the appellant and making payment of the same by the appellant as a pre-condition for re-export of the impugned imported goods. 4. The Ld. Advocate Shri Prem Ranjan Kumar appeared and argued for the appellant and submitted that the consignments in question were wrongly shipped by the supplier and the Adjudicating Authority has not given any evidence to discard the same and therefore holding that the appellant has wilfully mis-declared the imported goods and has suppressed the facts is erroneous. 4.1 The Ld. Advocate further submitted that the Adjudicating Authority has accepted the contentions of the appellant that the consignments were sent by mistake from the side of supplier and that they are ready to accept it back and accordingly the cargo can be allowed to be re-exported with applicable fine and penalty and in such case differential duty may not be payable. He submitted that once the Adjudicating Authority accepted the submissio....
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....pecific intelligence that the Appellant was importing fabrics by mis-classifying them with an intent to evade duty, specifically Anti-Dumping Duty. He submitted that the case involves huge mis-declaration on all counts - description, classification as well as quantity, all of which would have not come to notice, but for the specific intelligence and investigation. 5.1 The Ld. AR further submitted that based on the statement of Sh. V. Karthik, Managing Director of the Appellant company, it appears that the entire business was conducted as per the financial control and operational management of Sh. Mahabir Prasad, the co-Noticee. It was submitted that Sh. V. Karthik has clearly and categorically stated in both his voluntary statements under Section 108 of the Customs Act, that at each step of the conduct of business, he was instructed by Sh.Mahabir Prasad to act in a particular manner, that similar mis-declared goods had been imported in numerous past consignments. This fact has also been stated by Sh.V.Parthiban, Director of M/s Sri Sai Exim (Customs Broker) in his voluntary statement under Section 108 of the Customs Act. 5.2 The Ld. AR averred that Sh. Mahabir Prasad has been....
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....raud revenue by a carefully planned operation. The option to re-export, citing a wrong-shipment is part of this plan as a residuary option to wriggle out of the situation. 5.7 The Ld. AR averred that the uncontested contraventions of Section 46, viz. mis-declaration of classification, description and valuation, rendered the goods liable for confiscation under Sections 111(l) and (m) ibid, attracting penal provisions. It was further submitted that once the goods are confiscated, the property vests with Government as per Section 126 of the Customs Act and it is only when an option for redemption is sought by the importer, the provisions of Section 125(1) come into play. However, Section 125(2) of the Customs Act imposes a condition that once the option under Section 125(1) for redemption is availed, the payment of duty and other charges (which indicates and includes interest and penalty) is an inseparable condition. The Adjudicating authority has rightly permitted re-export, as sought by the Appellant, after redemption of the goods, only "consequent" to payment of differential duty. 5.8 The Ld. AR relied on the decision of Larger Bench of this Tribunal in Hemant Bhai R. Patel V....
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....y @20% per SQM or Rs. 150 per Kg whichever is higher." "81. I find that the declared description of the above discussed 3 import consingments of fabric of M/s OSIPL do not correspond to the actual description of the import consignments since they are grossly mis-declared in quantity as well as description, as brought out in the paras above. It is also found that the said 3 import consignments were mis-declared to evade specific rate of Customs Duty. Therefore, the said 3 import consignments are liable for confiscation under the provisions of Section 111(l) and Section 111(m) of the Customs Act, 1962." "83. I further find that bills of entry no. 2299525 & 2299510 both dated 04.09.202 are live consignments which has to be confiscated under the provisions of Section 111(l) and 111(m) of the Customs Act, 1962 for gross mis-declaration in both quantity as well as description. The third bill of entry no. 2214121 dt 29.08.22 for which out of charge was given was also seized and is liable for confiscation under the provisions of Section 111(l) and 111(m) of the Customs Act, 1962 for gross mis-declaration of imported goods in both quantity as well as description. This act ....
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....ellant lead us to the inevitable conclusion that the appellant intended to evade payment of Customs duty / Anti Dumping duty. While we are on this subject, we deem it appropriate to refer to the recent judgement passed by the Principal Bench of CESTAT in the case of M/s. Surendra Electricals Vs Commissioner of Customs, (Export), New Delhi [2024 (1) TMI 536 - CESTAT New Delhi] wherein it is held as follows: - "The defence put forth by the appellant do not inspire any confidence in this regard. It cannot be accepted that the appellants were importing the goods without knowing the true nature of the goods. Appellants submission that they have opted for first check, also cannot be said to be valid defence for the reason that first check is a facility to determine the exact nature of the goods, and not a facility to mis-declare. The invoice of the Chinese Supplier is not having any details to infuse any confidence. Hence in our view the appellant have deliberately misdeclared the goods." Similar view has been taken by a Coordinate Bench of CESTAT, Mumbai in the case of M/s. Swastik Creation and Shri Manish Shah, Proprietor Versus Commissioner of Customs, Air Special Cargo, M....
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.... words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury enures therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to be deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi and Ors. (2003 (8) SCC 319)." 90. In the present context, I find that M/s OSIPL filed bills of entry with wrong description, quantity, value....
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....he correct classification or value of the goods imported, that necessitated a first-check assessment would be on the importer. This is besides the cases where the proper officer may still feel a lack of sufficient information or data, beyond what is provided by the importer, in enabling a proper assessment of the imported goods. 16. In the instant case, admittedly, the importer was a regular importer of the same goods and prudent understanding of the situation would lead only to the conclusion that he was aware of what was being purchased from the foreign suppler as every business transaction of purchase and sale happens only with a determination of the item being dealt with, including the precise technical characteristics thereof; any negotiation of pricing or terms of supply happens only after the transacted goods are clearly identified and defined. 17. In the instant case, the importer has not placed any documentary evidence in the nature of supplier's test reports to justify the description of goods declared by them. Their claim of wrong shipment also sounds hollow under the circumstances as no supplier of such huge volume of goods would remain silent for as long as 4 mon....
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....nfiscation such fine as the said officer thinks fit : xxxx xxxx xxxx Provided further that], without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.] xxxx xxxx xxxx" 20. The question raised by the appellant that when the goods have been re-exported, the question of confiscation of goods under Section 111(l) and (m) of the Customs Act 1962 does not arise and that no redemption fine could be imposed for goods re-exported is like putting the cart before the horse. Confiscation of offending goods under Sections 111(l) and (m) is an action precedent to allowing the same to be redeemed under Section 125 of the Customs Act 1962. The permission for re-export of goods that have been confiscated and sought to be redeemed, is an administrative order eman....
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.... (1) Whether in terms of Section 125 of the Customs Act, the power vests in the adjudicating authority to prescribe any fine for re-export when liability to confiscation under Section 111 is established? (2) Whether in the circumstances where the misdeclaration, etc., is established leading to the orders of the confiscation of the goods, penalty is not leviable when the goods are sought to be re-exported? On going through the detailed referal order we understand the issue No. (1) to mean whether in terms of Section 125 of the Customs Act power is vested with the adjudicating authority to impose redemption fine when liability to confiscation under Section 111 is established even when permission for re-export is granted. Both sides appearing before us also agree that scope of issue No.(1) is as above. 2. The reference was occasioned in view of the difference of opinion between Benches regarding the power of the adjudicating authority to impose redemption fine and penalty when re-export is permitted. The Bench before which the matter came up for hearing was not inclined to agree with view that when re-export is permitted no redemption fine and penalty can ....
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....t exceed market price of the goods less duty chargeable in respect of such goods. The fine is to be paid apart from the duty and charges payable on such goods. Section 126 of the Customs, 1962 lays down that when any goods are confiscated under the Customs Act, 1962 such goods shall thereupon vest in Central Government. Thus when goods are found to be offending goods and an order of confiscation is passed, then the goods shall vest in Central Government. If they are to be restored to the owner, the adjudicating authority can do so only under provisions of Section 125 which prescribes the option of a fine in lieu of confiscation. Thus Section 125 does not have a nexus with how the goods are dealt with after payment of fine in lieu of confiscation. The find envisaged thereunder is only to get over the order of confiscation irrespective of whether the goods are cleared for home consumption for re-export. When the importer makes a request for re-export it has been a general practice in Custom Houses to consider such a request having regard to the bona fides of such request. By re-exporting the goods the importer can avoid the payment of duty but not the fine in lieu of confiscation." ....
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.... Vs Commissioner of Customs [2003 (153) ELT 226 (Tri-LB)]. Relevant portions of the decision in Final Order No. 40621/2024 dated 07.06.2024 read as under:- "6. Heard both sides. The question that needs to be answered is whether; A) when the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the CA 1962 arises. B) no redemption fine is imposable on the goods that are re-exported. C) no penalty under Section 112(a) can be imposed when goods are re-exported." .... .... 13. When goods are imported in breach of statutory provisions, Section 111(d) of the CA 1962 squarely applies as the goods become offending goods liable for confiscation. Confiscation of goods in the situation of a statutory breach by imported 'prohibited goods', is not discretionary. Section 111(d) of the CA 1962 reads as under; 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation:- (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpos....
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....ot to confiscate goods that are found liable to such action as per section 111(d) of the CA 1962. As per the discussion above the Customs Act only provides a distinction between 'prohibited goods' and 'other goods' under Section 125(1) of the CA 1962 for the purpose of allowing redemption of the goods. 14. From the discussions it is clear that an order permitting re-export of goods is sequentially a separate process which would come into play only after the importer redeems the confiscated goods. Simply because the decision is bundled along with a quasi-judicial order will not change the sequence of events. This being so confiscation of goods under Section 111(d) of the CA 1962 is a must before the administrative permission for the export of the said goods is given at the administrative discretion of the Proper officer. Appellants averment in this regard are hence rejected. No redemption fine is imposable on the goods that are re-exported. 15. The appellant has stated that it is a settled position of law that no redemption fine is imposable on the goods that are re-exported. We find that once goods are imported in contravention of any provisions of the CA....
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....ld as under; "We are broadly in concurrence with the reasoning of the High Court that in matters of administrative discretion it is not open to the courts to interfere in minute details, except on grounds of mala fides or extreme arbitrariness. Interference should be only within very narrow limits, such as, where there is a clear violation of a statute or a constitutional provision, or extreme arbitrariness in the Wednesbury sense." The appellants averments in this regard are hence rejected. No penalty under Section 112(a) cannot be imposed when goods are re-exported. 18. A penalty is the result of a breach of statutory duty. The main object behind the imposition of penalty is deterrence. Re-export of the goods does not cure the breach of statutory duty already committed. While a fine is imposed on the redemption of offending goods imported in breach of law, a penalty is levied on a person responsible for the breach of statutory duty. No interfere should ordinarily be made by an appellate body, in the discretionary order passed by a lower authority, just because another view might be possible, except on grounds of mala fides or extreme arbitrarin....
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....have been seized to pay a fine in lieu of confiscation. In an adjudication proceeding as in the present case these are the provisions which would come into play. If the owner gets the goods released after payment of redemption fine, he may either clear it for home consumption or re-export the same subject to the relevant rules. A permission granted for re-export on the basis of a request made by the owner of the goods is outside the purview of the adjudication proceedings, as mentioned above. We, therefore, answer the questions referred in the affirmative and hold that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods. The reference is answered as above." Judicial discipline requires that we follow the judgment of the Larger Bench. The appellant's plea is hence rejected. 21. For the reasons discussed, the impugned order is upheld and the appeal filed by the appellant is rejected and disposed of accordingly." 25. Thus, the ratio decidendi of both the above decisions is squarely applicable to the facts obtaining in this appeal and both the questions raised on imposition....