CESTAT Upholds Duty Demand for Admitted Misdeclaration of Imported Baby Garments

Anand Impex Vs Commissioner of Customs (Preventive) (CESTAT Delhi)

The appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi concerned the challenge to an Order-in-Appeal confirming reassessment of imported goods, demand of differential duty, confiscation under Sections 111(l) and 111(m), and imposition of penalty under Section 114A of the Customs Act, 1962.

The appellant had imported various baby products through a Bill of Entry dated 10.08.2019, declaring specific quantities, classifications, and values. Based on intelligence regarding mis-declaration of value and quantity, the consignment was examined. Upon examination, discrepancies were found between declared and actual quantities, descriptions, and tariff classifications. The total declared quantity was 4771.5 dozens, whereas the quantity found was 4849.5 dozens, along with differences in classification of certain goods.

The goods were seized under Section 110 on the belief that they were liable for confiscation. The proprietor of the appellant firm, in a statement recorded under Section 108, admitted mis-declaration, attributing it to the supplier but accepting responsibility as importer. He agreed to reassessment of value and payment of differential duty, fine, and penalty, and waived issuance of a show cause notice.

Subsequently, the declared value of ₹9,72,020 was rejected under Rule 12 of the Customs Valuation Rules. In the absence of identical goods data, the value was re-determined at ₹29,38,629 based on contemporaneous import data of similar goods under Rule 5. Differential duty of ₹8,52,639 was demanded, penalty of ₹5,77,198 was imposed under Section 114A, and the goods were confiscated with an option of redemption on payment of ₹60,000. The Commissioner (Appeals) upheld the order, leading to the present appeal.

Before the Tribunal, the appellant contended that the differences in quantity were minor and unintentional, arising from supplier errors. It was argued that transaction value should have been accepted and that reliance on general data for revaluation was improper. The appellant also challenged confiscation, redemption fine, and penalty.

The Department argued that mis-declaration of description, quantity, and value stood admitted by the appellant. It was submitted that the appellant had voluntarily accepted reassessment and liability, waived show cause notice, and paid duty and penalty. Therefore, rejection of declared value and re-determination under valuation rules was justified.

The Tribunal noted that mis-declaration of quantity, description, and value was undisputed. The explanation attributing errors to the supplier was not accepted as sufficient to absolve the importer of responsibility. It emphasized that under the self-assessment regime, the importer is responsible for correct declaration of value, quantity, and description as per Sections 46(4) and 14(1) of the Act.

The Tribunal also relied on the voluntary statement recorded under Section 108, noting that it is a valid piece of evidence and had not been retracted. Since the appellant admitted mis-declaration and agreed to reassessment, the principle that admitted facts need not be proved was applied.

On valuation, the Tribunal found no error in rejection of declared value under Rule 12 and re-determination under Rule 5 using contemporaneous import data of similar goods, as data for identical goods was not available.

Regarding confiscation and penalty, the Tribunal held that deliberate mis-declaration was established. Consequently, confiscation under Sections 111(l) and (m), redemption fine of ₹60,000, and penalty under Section 114A were upheld. The Tribunal also noted that reduced penalty to the extent of 25% was available if paid within the stipulated time.

In conclusion, the Tribunal found no merit in the appeal. The order confirming reassessment, duty demand, confiscation, and penalty was upheld, and the appeal was dismissed.

FULL TEXT OF THE CESTAT DELHI ORDER

1. The appellant has assailed the Order-in-Appeal’ confirming the reassessment of the goods and the duty liability thereon, confiscation under Section 111(1) and (m) and penalty under Section 114A of the Customs Act, 1962².

2. The appellant filed Bill of Entry³ No.4452338 dated 10.08.2019 for import of Baby Blanket (Polyester), Baby Frock (Polyester), Baby Jacket (Polyester), Baby Metal Bottle, Baby Booty (Knitted), Baby Socks, Baby Suit (Cotton Knitted), Baby Teether and Baby Winter Top (Knitted Polyester). Based on specific intelligence with regard to mis-declaration of value and quantity of goods, the consignment was put on hold on 14.08.2019 for examination by the Customs (Preventive) Delhi. On examination, the details of the goods found was as follows:-

3. The goods were seized under Section 110 of the Act on the reasonable belief that the goods were liable to confiscation. The statement of Deepanshu Anand, Proprietor of the appellant Company was recorded on 21.08.2019 under Section 108 of the Act, wherein he admitted mis-declaration attributing as a mistake on the part of the supplier and being an importer he was fully responsible for the same. He agreed that the value of the goods needs to be reassessed and would pay the differential duty which may accrue along with fine and penalty. The appellant sought for the waiver of the show cause notice. Consequently, on adjudication, the declared assessable value of Rs.9,72,020 was rejected under Rule 12 of the Valuation Rules and on the basis of contemporary import data of similar goods, the value of the goods recovered was re-determined to Rs.29,38,629 and on that basis, the duty liability was determined as Rs.8,52,639/-. Penalty of Rs.5,77,198/- was imposed under Section 114A of the Act. The goods were ordered to be confiscated under Section 111(1) and (m) with an option to redeem the same on payment of redemption fine of Rs.60,000/-. On appeal, the Commissioner confirmed the said order. Hence the present appeal has been filed.

4. Heard Shri Richik Harikant, learned Counsel for the appellant and Shri Girijesh Kumar, learned Authorised Representative for the Department and perused the case records.

5. Learned Counsel for the appellant referring to the declared quantity of the goods and what was found submitted that the difference in the two was not very huge. In the case of Baby Booty and Baby Teether, the difference was found to be merely of 2 dozens less than what was declared by the appellant on the basis of the documents sent by the supplier. He thereby emphasized that there was no intent to mis-declare the quantity of the goods.

On the issue of mis-declaration of value, he submitted that the quantity of goods being different, the value needs to be re-assessed. He submitted that the value declared has been wrongly rejected merely on the basis of broad description found in the NIDB Data and therefore, the allegation of mis-declaration of value, consequent seizure and imposition of redemption fine and penalty is unjustified. The learned Counsel also emphasized that the value of the imported goods for the purpose of levy of duty is the transaction value and not the deemed value of such or like goods. The learned Counsel has also challenged that there is no material on record to show that the quantity, design, composition, etc. of fabric imported by the appellant and the fabric referred to in the impugned order is similar. Learned Counsel also challenged the order of confiscation along with redemption fine and penalty of equivalent amount under Section 114A of the Act.

6. Per contra, the learned Authorised Representative for the Department reiterated the findings of the Authorities below and pointed out to the fact that the appellant voluntarily waived the SCN and PH. He accepted the re-valuation and paid the requisite duty and penalty amount. He referred to the decision of the Tribunal in the case of Commissioner of Customs (Import), ICD, TKD, New Delhi Vs. Sodagar Knitwear⁴. Learned Authorised Representative argued that the mis-declaration in the description and the quantity of the goods coupled with under-valuation stands proved. Consequently, the rejection of the declared value under Rule 12 and re-determination thereof under Rule 5 of Customs Valuation Rules, 2007 has been rightly invoked. Since the case satisfies deliberate mis-declaration, the confiscation under Section 111(m) & (I) and penalty under Section 114(A) is proper.

7. From the records of the case and the submissions made by the learned Counsel for the appellant, it is an undisputed position that the quantity, description and valuation of the goods imported were mis-declared. However, the reason given by the appellant is that the mistake has occurred during the loading of the items from the suppliers side and this fact of mis-declaration came to notice only during the examination of the container. Similarly, for non-declaration of MRP/RSP, as per the provisions of Standard of Weights and Measure (Packaged Commodities) Rules, 1977, he stated that the mistake is on the part of the supplier, who has missed to fix the tag/logo of MRP/RSP on the items. It is also evident from his statement that he had admitted the mistake and the liability of making good the deficient duty being the importer of the goods. He requested for waiver of the show cause notice and agreed to pay the differential duty on the basis of reassessment in terms of the statutory provisions. Thus the appellant having accepted the mis-declaration and, thereby rejection of the declared value agreed to pay the re-determined value voluntarily. The law on the issue of reliance being placed on the voluntary statement made under Section 108 of the Act is well settled that it is a valid piece of evidence. We also find that the statement has not been retracted till date. In view of the admission of the appellant and following the decision of the Apex Court in Commissioner of C.EX., Madras versus M/s Systems and Components Private Ltd⁵ that what has been admitted need not be proved, nothing further survives to be appreciated.

8. Following the decision of the Apex Court in the case of M/s. Systems and Components Private Ltd., the Tribunal in the case of Sodagar Knitwear observed that since the Manager of the importer specifically admitted in his statement that he agreed with the manner of calculating the assessable value and the differential value held that the appellant was liable to pay the differential duty.

9. We also find, the Adjudicating Authority has categorically observed that contemporary import data of identical goods vis-a-vis imported goods was not available and therefore, the value of imported goods has not been determined in terms of Rule 4 of the Valuation Rules. Consequently, the value of goods has been re-determined as Rs.29,38,629/- in terms of Rule 5 on the basis of contemporary import data of similar imported goods as mentioned under various BEs referred therein.

10. We also do not find any error in the observations of the Adjudicating Authority that in the era of self-assessment, the prime responsibility is of the importer to make the correct declaration as to the quantity, quality, and description of the goods. Passing on the responsibility of the mistake/misdeclaration on the supplier will not absolve the importer from its liability to pay the correct duty. Section 46(4) read with Section 14(1) of the Act requires the importer to declare the true assessable value and proper description and quantity of goods for the purposes of correct assessment.

11. In the facts of the present case, there is no reason to interfere with the order of confiscation under Section 111(1) & (m). The redemption fine of Rs.60,000/- imposed on the appellant on the re-determined value is just and fair and, therefore, needs no interference. The penalty under Section 114A of the Act has also been ordered to be reduced to the extent of 25%, if the same is deposited within a period of 30 days from the date of communication of the order.

12. We do not find any merit in the present appeal, and hence the same is dismissed.

[Order pronounced on 10^th April, 2026.]

Notes:

¹ No.CC(A)CUS/D-11/Prev./NCH/1057/2020-21 dated 12.11.2020

² Act

³ B/E

⁴ 2018 (362) ELT 819 (Tri.-Del.)

⁵ 2004 (165) ELT 136 (SC)