Case Law Details
Surendra Electricals Vs Principal Commissioner (CESTAT Delhi)
M/s Surendra Electricals filed a bill of entry to clear imported LED lights, but upon examination, it was found that the quantity of goods was mis-declared. The Customs authorities re-assessed the bill of entry, imposed penalties, and allowed redemption of goods on payment of a fine. The appellant appealed to CESTAT Delhi challenging the penalties imposed.
The appellant argued that the order was illegal, and the excess quantity was sent by the supplier’s mistake. They also claimed that there was no intention to mis-declare. However, CESTAT upheld the penalties, considering the substantial difference in the quantity declared and found during examination.
CESTAT Delhi upheld the penalties imposed on M/s Surendra Electricals for mis-declaring the quantity of imported LED lights. The decision emphasizes the importance of accurate declarations in customs proceedings and the consequences of mis-declarations.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s Surendra Electricals1 filed bill of entry dated 20.09.2017 to clear the imported LED lights. The appraising group ordered first check of the consignment i.e, it ordered the goods to be examined first before the bill of entry was assessed by the appraising group officers. It needs to be pointed out that normally when a bill of entry is filed the appraising group assesses/re-assesses the bill of entry based on the documents and the goods are examined thereafter. This process is referred to as second appraisement or second check and has advantage of faster processing. The alternative is the first appraisement or first check in which the goods are examined first and thereafter the bill of entry is assessed. This method is followed in few cases and this is one such case. The Special Intelligence and Investigation Branch2 of the customs house had also placed an alert in the customs EDI system with respect to the same consignment. The SIIB examined the goods and investigated the matter and it found that the quantity of goods actually imported was 21,660 kg against the declared weight of 15,231 kg. The number of the LEDs found were also different from what was declared under bill of entry.
2. The appellant submitted letters dated 27.09.2017 and 05.10.2017, waiving the requirement of show cause notice3 and personal hearing and prayed that the goods may be released at the earliest. Accepting the prayer, the Additional Commissioner of Customs, ICD TKD, re-assessed the bill of entry and confirmed higher amount of duty. He also confiscated the goods and allowed their redemption on payment of fine and imposed penalties. The operative part of the order is reproduced below:
ORDER
i. I reject the transaction value of Rs. 40,62,307/- as declared by the importer in respect of the goods covered under the subject Bill of Entry No. 3307384 dated 20.09.2017 contained in the Container No. UETU5512830, under Rule 12 of Customs Valuation (Determination of Value of Imported Goods,) Rules 2007 read with Section 14 of the Customs Act, 1962.
ii. I order for re-determination of value of the impugned goods to Rs. 43,42,301/- under rule 5 of the Customs Valuation (Determination of Value of Imported Goods ) Rules, 2007 read with section 14 of the Customs Act, 1962.
iii. I order for confiscation of the goods valued at Rs. 43,42,301/- imported under B/E No. 3307384 dated 20.09.2017 under Section 111(l) and Section 111(m) of the Customs Act, 1962. However, I give an option to the importer to redeem the goods valued at Rs. 43,42,301/- on a payment of Redemption Fine of Rs. 4,50,000/- (Rupees Four Lakh Fifty Thousand only) under section 125(1) of the Customs Act, 1962.
iv. I re-determine duty on re-determined value as Rs. 15,62,110/- and the same is payable by the importer
v. I impose a Penalty of Rs. 20,000/- (Rupees Twenty Thousand only) on the importer M/s Surendra Electronicals under Section 112 (a)(ii) of the Customs Act, 1962.
vi. I impose a penalty of Rs. 5,50,000/- (Rupees Five Lakh Fifty Thousand only) on the importer under Section 114AA f the Customs Act, 1962.
vii. The goods may be cleared upon payment of duty on the redetermined value in addition to the redemption fine an penalty imposed.
3. Aggrieved, the appellant appealed to the Commissioner (Appeals) who upheld the order-in-original. Hence this appeal.
4. We have heard learned counsel for the appellant and learned authorized representative for the Revenue and perused the records.
5. The submissions on behalf of learned counsel for the appellant are as follows:
(i) The order passed by the Additional Commissioner (upheld by the impugned order) is illegal and void. The appellant filed the bill of entry as per the commercial invoices filed the suppliers. Due to mistake the supplier sent more goods;
(ii) The investigation has not provided any positive evidence with regard to the false or incorrect statement, declaration and documents submitted at the time of filing the bill of entry and, therefore, the penalty imported under section 114AA of the Customs Act, 1962 is not sustainable. Penalty under this section can be imposed only when a person knowingly or intentionally makes, signs, or uses, or causes to be made signed or used, any declaration statement or documents which is false or incorrect in any material particular. Since the bill of entry was filed as per the commercial invoice, packing list, bill of lading etc., what was declared in the bill of entry was as per the documents sent by the suppliers. Therefore, importer had not knowingly or intentionally made or signed any false declaration or submission. Therefore, the penalty under section 114AA cannot be invoked.
(iii) During the pendency of the adjudication proceedings the appellant had incurred demurrage charges and detention charges which were not considered by the Department while imposing the redemption fine. Therefore, it can be said that the adjudication authority has not considered and arrived at the correct margin of profit while imposing the redemption fine under section 125(1) of the Customs Act, 1962.
(iv) Further, the goods are themselves not liable for confiscation and, therefore, neither any fine under section 125 nor any penalty under section 112 should have been imposed.
6. Learned authorized representative appearing for the Revenue made the following submissions;
(i) It is undisputed that quantity declared in the bill of entry was much lower than what was actually found during examination and, therefore, the goods had to be valued accordingly. Value of the imported goods was re-determined based on the values of contemporaneous imports of goods during the relevant period which has been agreed to and accepted by the assessee in writing;
(ii) The importer sought waiver of show cause notice and personal hearing;
(iii) The bill of entry was filed on 20.09.2017 and specific intelligence was received that there was mis-declaration in this consignment and when examined, the quantity found was 21,660kg as supposed to declared 15,233 kg i.e., an excess of 42.19%. Since the quantity was more than what was declared, the proper officer had reasonable doubt regarding the value of the goods and, therefore, he rejected the value under rule 12 and re-determined it as per Rule 5 of the Valuation Rules. The appellant had waived the SCN and personal hearing voluntarily and the value was enhanced by the assessing officer.
(iv) Since the appellant had accepted its mistake and thereby relinquished its right for speaking order as per section 17(5) of the Customs Act, 1962, nothing survives in this appeal.
(v) Since there was mis-declaration of the quantity of the goods they were correctly confiscated under section 111 and allowed redemption under section 125.
(vi) Redemption fine which was imposed was Rs. 4,50,000/- only to redeem the goods valued at Rs. 43,42,301/-, i.e., the fine was only about 10% of the value of the goods. Section 125 permits imposition of fine not exceeding the market value of the goods and the fine imposed in this case is only about 10% of the assessable value of the goods. Therefore, this does not call for any interference.
(vii) The penalty imposed under section 112 (a)(ii) is only Rs. 20,000/- which is also very small compared to the value of the goods.
(viii) Penalty under section 114AA has been correctly imposed because the appellant had mis-declared the value of the goods and the quantity in the bill of entry filed before the customs authority. Any letter from the supplier stating that excess quantity was sent by mistake is not tenable. The intention to mis-declare can only be inferred in the facts and circumstances of the case. It is stands to reason and that if the importer ordered certain quantity of the goods about the same quantity will be sent by the supplier. A supplier does not send 42% more goods than was ordered. Therefore, it is evident that the appellant had the intention to mis-declare the quantity of the goods. Maximum penalty imposable under section 114AA is five times value of the goods and in this case, the penalty imposed under section 114AA is only about 11 % of the value of the goods.
(ix) For these reasons, the impugned order is correct and proper and calls for no interference the appeal may be dismissed.
7. We have considered the submissions on both sides and perused the records.
8. It is undisputed that the appellant filed a bill of entry declared certain goods and on examination, 42% more goods were found by the customs authorities. Learned counsel for the appellant emphasized that the excess quantity was found during first check examination. We find that the law does not distinguish between the first check and the second check. What is important if the appellant made the correct declaration in the bill of entry or not. The bill of entry was filed on 20.09.2017 by the appellant. It does not matter whether the apprising group, thereafter, decides to assess the goods first based on the documents and then gets them examined or gets the goods examined first. In both cases, the mis-declaration in the bill of entry is already complete.
9. It also needs to be pointed out that the SIIB officers also received specific intelligence about this mis-declaration and place an alert in the customs EDI system. On examination, the mis-declaration was proved. The difference in quantity is substantial as 42% more goods were imported then what were declared.
10. When excess quantity of goods were found, it was logical for the officer assessing the bill of entry to reject the transaction value because, the transaction value reflected in the invoices and other documents was for declared quantity and not for the quantity actually imported. Once the declared assessable value is rejected under Rule 12 of the valuation rules, valuation should be proceeded under Rules 4 through 9. In this case, rule 5 of the Valuation Rules was applied and the assessable value was enhanced from Rs. 40,62,307/- to Rs. 43,42,301/-. Consequently, the duty liability increased by Rs. 2,79,994/- and the re-determined value has been accepted by the importer in its letter dated 06.10.2017. Therefore, we find no infirmity whatever in re-assessing duty on the imported goods.
11. Section 111(l) and section 111(m) of the Act is read as follows:
“ Sections 111 Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to
confiscation………………
(l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54;”
12. In this case, the goods were found to be in excess of the entry made i.e. the bill of entry and, therefore, they were liable to confiscation under section 111(l). The imported goods also did not correspond in value and, therefore, were also liable for confiscation under section 111(m). We, therefore, find no infirmity in the Additional Commissioner confiscating the imported goods and Commissioner (Appeals) upholding such confiscation in the impugned order.
13. Having confiscated the goods worth Rs. 43,42,301/- the Additional Commissioner allowed the redemption on a fine of Rs. 4,50,000/- which is about 10% of the value of the goods. Section 125 of the Act places the restriction that the amount of fine cannot exceed the market value of the goods. In the factual matrix of this case, we find the redemption fine imposed is just and fair.
14. Section 112(a)(ii) provides for penalty on any person who, in relation to any goods, does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 111. The penalty imposable in case of dutiable goods cannot exceed 10% of duty sought to be evaded. In this case the duty sought to be evaded which was then enhanced by the impugned order is Rs. 2,02,877/- the penalty imposed under section 112 is Rs. 20,000/-which, in the factual matrix of the case, is fair and proper.
15. We have considered the submissions regarding penalty under section 114 AA which reads as follows:
“ Section 114AA in the Customs Act, 1962
114AA. Penalty for use of false and incorrect material.—If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.”
16. Learned counsel for the appellant vehemently argued that knowledge and intention are essential to impose fine under section 114AA. It is his submission that since the appellant filed the bill of entry as per the commercial invoice, packing list etc., no intention can be attributed to the appellant. We have considered these submissions and do not find any force in them. It is undisputed that the goods which were actually imported are far in excess of what was declared. The intention of the appellant can only to be inferred from the facts of this case. The appellant declared a lesser quantity of goods than what was actually imported. The confiscation was examined as there was specific intelligence to this effect by the SIIB officers. On examination the intelligence proved correct and 42% of excess goods were found.
17. In these circumstances, we find that adjudicating authority has correctly held that the appellant had knowingly mis-declared the value of the quantity of the goods in the bill of entry and impose penalty under section 114 AA. The Commissioner (Appeals) has, in the impugned order correct by upheld this penalty.
18. In view of above, we find that the impugned order is correct and proper and calls for no interference.
18. The impugned order is upheld and the appeal is rejected.
[Order pronounced in open court on 24/07/2023]
Notes
1 The Appellant
2 SIIB
3 SCN
