Case Law Details
Sterling Impex Vs Commissioner of Customs (Appeals) (CESTAT Delhi)
CESTAT Delhi held that penalty under section 112 and 114AA of the Customs Act, 1962 duly imposed since the appellant had intentionally mis-declared the nature of the goods in the Bill of Entry (BOE).
Facts- The appellant filed Bill of Entry to clear goods declared as “Plain Polyester fabric with PVC Lamination of 0.30 mm”. Officers of the Special Intelligence and Investigation Branch examined the consignment and found that the quantity of the goods was as declared but the fabric which was imported was of much higher thickness ranging from 0.38mm to 0.45 mm. Samples of the goods were sent for testing to the Central Revenue Control Laboratory who sent their test reports stating that the goods were of thickness 0.38 mm to 0.45 mm. The imported goods were seized u/s. 110 of Customs Act, 1962 under the belief that the goods were liable for confiscation u/s. 111 of the Act.
Accordingly, the value of the goods were re-determined and differential duty was demanded. Penalty u/s. 112(a) and 114AA were also imposed.
Conclusion- Held that the appellant had clearly made a declaration in the Bill of Entry which is false. The appellant’s contention is that it had no intention and it had actually ordered for goods of 0.3 mm thickness but its supplier had supplied goods of much higher thickness (and therefore of higher quality) but sent an invoice for goods of only 0.3 mm. This submission cannot be accepted. If anyone orders some goods and the seller delivers wrong goods, one will naturally return them. Instead, in this case, the appellant accepted the mistake and sought provisional release of the goods which were actually imported. This shows that wrong goods were not sent by the supplier and it is the appellant who made the wrong statement in the Bill of Entry and produced an invoice for the wrong goods to evade duty. The intention of any person can only be inferred from the facts of the case and the behaviour of the person. In this case, we have no hesitation in concluding that the appellant had intentionally mis-declared the nature of the goods in the Bill of Entry. Therefore, the penalty of Rs. 3,00,000/- each was correctly imposed on the appellant under sections 114AA and 112 of the Act.
FULL TEXT OF THE CESTAT DELHI ORDER
The order-in-appeal1 dated 03.10.2019 passed by Commissioner (Appeals) upholding the order-in-original2 dated 07.12.2016 passed by the Additional Commissioner of Customs is assailed by M/s. Sterling Impex3 in this appeal. In his OIO, the Additional Commissioner decided the proposals made in the show cause notice4 dated 24.2.2014 issued to the appellant.
2. The facts which led to the issue of the SCN are that the appellant filed Bill of Entry No. 3055415 dated 21.08.2013 through its Customs Broker to clear goods declared as ―Plain Polyester fabric with PVC Lamination of 0.30 mm‖. Officers of the Special Intelligence and Investigation Branch5 examined the consignment and found that the quantity of the goods was as declared but the fabric which was imported was of much higher thickness ranging from 0.38mm to 0.45 mm. Samples of the goods were sent for testing to the Central Revenue Control Laboratory6 who sent their test reports stating that the goods were of thickness 0.38 mm to 0.45 mm.
3. The imported goods were seized under section 110 of Customs Act, 19627 under the belief that the goods were liable for confiscation under section 111 of the Act and the statement of the owner of the importer was recorded and the matter was investigated. In his statements given under section 108 of the Act, Shri Shikhar Mahajan, owner of the appellant firm accepted the test report of CRCL and admitted their mistake and sought provisional release of the seized
4. The Bill of Entry, the invoice and other documents submitted by the appellant declared the goods to be of 0.3 mm while the goods which were imported were of much thicker varying from 0.38 mm to 0.45 mm. Therefore, the declared transaction value was rejected under Rule 12 of the Customs (Determination of Value of Imported Goods) Rules, 20078 and it was re-determined under Rule 5 of the Valuation Rules, i.e., based on the values of similar goods.
5. As requested by the appellant, the goods were released provisionally and the appellant paid the duty as re-determined. Thereafter the SCN was issued proposing to:
a) Reject the transaction value under Rule 12 of the Valuation Rules and re-determine it under Rule 5 of the Valuation Rules and accordingly re-determine the value of the imported goods and the duty payable thereon;
b) Confiscate the goods under section 111(m) of the Act; and
c) Impose penalties under section 112 and 114AA of the Act.
6. After considering the submissions made by the appellant in defence, the Additional Commissioner passed the OIO as follows:
“(i) The declared assessable value of the goods imported vide Bill of Entry No. 3055415 dated 21.08.2013 as Rs. 73,00,169/- is rejected under Rule 12 of the CVR, 2007 and ordered to be re-determined as Rs. 98,83,894/- under Rule 5 of the VCR, 2007.
(ii) The goods having re-determined value of 98,83,894/- covered by Bill of Entry No. 3055415 dated 21.08.2013 are held liable to confiscation under section 111 (m) of the Customs Act, 1962. The impugned goods are already provisionally released to the noticee and are not physically available for confiscation. Accordingly, in terms of section 125 (1) of the Customs Act, 1962, I impose fine of Rs. 6,50,000/- (Rupees Six Lakhs Fifty Thousand only).
(iii) The Bill of Entry No. 3055415 dated 21.08.2013 assessed provisionally is ordered to be assessed finally on redetermined value of Rs. 98,83,894/- under section 18 (2) of the Customs Act, 1962 and the duty already collected (in excess of Rs. 1,76,733/-) is ordered to be appropriated accordingly.
(iv) As the duty has been fully paid by the importer at the time of seeking provisional release of the impugned goods, no interest liability accrues under section 18 (3) of the Customs Act, 1962.
(v) Penalty of 3,00,000/- (Rupees Three Lakhs only) is imposed on M/s Sterling Impex under section 112 (a) of the Customs Act, 1962 ;
(vi) Penalty of 3,00,000/- (Rupees Three Lakhs only) is imposed on M/s Sterling Impex under section 114AA of the Customs Act, 1962 &
(vii) I hold that the excess duty of Rs. 1,76,733/- paid by the importer may be appropriated, in addition to enforcing Bank Guarantee bearing S. No. 37021LG007213 dated 04.09.2013 for Rs. 8,00,000/- against the redemption fine being imposed under section 125 of the Customs Act, 1962 and against penalties being imposed under section 112 (a) and section 114AA of the Act, ibid‖.
7. On appeal by the appellant, the Commissioner (Appeals) upheld the OIO.
Submissions on behalf of the appellant
8. Shri Aman Ahluwalia, learned counsel for the appellant made the following submissions :
a) The appellant had placed an order for polyester fabric with PVC coating of thickness 0.3 mm only and therefore, all documents showed the same description. It had correctly described the same thickness in the Bill of Entry and therefore, there was no mis-declaration at all.
b) It’s overseas supplier had wrongly sent to it goods of much higher thickness and the appellant cannot be penalized for that action of the overseas supplier.
c) Therefore, the goods were wrongly confiscated under section 111(m) and penalty under section 112 was also wrongly imposed on the appellant.
d) Penalty under section 114AA is attracted only if there is intent. In this case, the appellant had declared in the Bill of Entry the goods which it had imported honestly and had no intent to mis-declare and therefore, penalty under section 114AA could not have been imposed.
e) The transaction value was wrongly rejected under Valuation Rule 12 and it should have been accepted as there is nothing on record to show that the appellant had paid anything more than what was declared for the goods. Rejection of the declared value under Valuation Rule 12 requires the proper officer to first have a reason to doubt the truth and accuracy of the transaction value and on such belief, he can call for information and after receiving such information, he still has a reasonable doubt, the proper officer can reject the transaction value. In this case, the officer had no reason to doubt the truth and accuracy of the transaction value and hence the rejection of transaction value under Rule 12 was incorrect.
g) After rejecting the transaction value, the officer adopted Valuation Rule 5 without ruling out Valuation Rule 4. He should have proceeded sequentially.
h) The officer relied on the NIDB data which cannot be relied upon.
Submissions on behalf of the Revenue
9. Learned authorized representative for the Revenue vehemently supported the impugned order and asserted that it calls for no interference. He made the following submissions.
a) The goods were examined and found to be different than those described in the Bill of Entry and the test report of CRCL confirmed it.
b) They were therefore, seized under section 110 of the Act since they were liable to confiscation under section 111(m) of the Act.
c) The appellant was summoned and in his statement, the proprietor of the appellant admitted their He did not dispute the test report of the CRCL.
d) Once the goods which are imported are found to be thicker (0.38 to 0.45 mm) than declared (0.3mm), the invoice value for 0.3 mm goods cannot be applied to the goods which were actually imported.
e) The SCN, therefore, proposed rejection of the transaction value under Valuation Rule 12 and it also recorded that there were no imports of identical goods and hence Valuation Rule 4 could not be applied. It, therefore, proposed to re-determine the value under Valuation Rule 5 based on the contemporaneous imports of similar goods.
f) The duty was re-assessed accordingly and it callsfor no interference.
g) Since the goods were mis-declared, they were confiscated under section 111(m) and were allowed
redemption on a modest fine of Rs. .
h) Penalty under section 112 follows the confiscation under section 111(m) and the amount of penalty of Rs. 3,00,000/- imposed on the appellant is quite reasonable and calls for no interference.
i) Penalty under section 114AA can be imposed if there was intentional mis-declaration. The intent can only be inferred from the facts surrounding it. In this case, the appellant’s argument was that it had ordered for only 0.3 mm fabric but the supplier sent the wrong goods of higher If that is true, the natural response of the appellant would have been to re-export the goods. Instead, the appellant sought provisional release of the goods which shows that the appellant intentionally misdeclared the goods in the Bill of Entry. Therefore, the penalty under section 114AA is just and fair.
ii) In view of the above, the appeal may be dismissed and the impugned order may be set aside.
Findings
10. We have considered the submissions advanced by learned counsel for the appellant and learned authorized representative for the Revenue and perused the records.
11. The undisputed facts are that the appellant had filed the Bill of Entry and produced invoices with goods of 0.3 mm thickness and on examination they were found to be of much higher thickness. On testing by CRCL, this fact was confirmed. The appellant does not dispute this fact.
12. The appellant’s submission is that although it ordered goods of only 0.3 mm thickness, the overseas supplier wrongly sent goods of greater thickness. This submission cannot be accepted. Firstly, no businessman of any prudence will send thicker and more expensive goods after invoicing for a thinner and less expensive goods. Secondly, if the appellant had any doubt about the nature of the goods which the supplier had sent, it could have asked to check them before filing the Bill of Entry. Thirdly, if the appellant had filed the Bill of Entry and only later, on examination, realized that its supplier had sent the wrong goods, the natural response of any buyer who receives wrong goods is to send them back. The appellant did not seek permission to re-export the goods. Instead, it sought their provisional release after they were seized. All these show that the goods which were sent were what the appellant wanted to import but it produced invoice for goods of much thinner and cheaper variety and also filed Bill of Entry accordingly.
13. In his statements recorded under section 108 of the Act, the owner of the appellant firm admitted its mistake.
14. The first submission of the learned counsel before us is that its transaction value should have not been rejected under Rule 12 because as per section 14 of the Act, the value of imported goods shall be the transaction value. We find that the duties of Customs under section 12 of the Act and the prohibitions and restrictions on import under the Act and any other Act are on ‘the goods imported into India’ and NOT ‘the goods said in the documents to have been imported into India’. Usually, the documents and the goods match but where there is a difference between what were actually imported and what is said to have been imported in the documents, duty has to be charged and prohibitions and restrictions have to be applied on the goods actually imported into India. In this case, the goods which were actually imported into India were of 0.38 mm to 0.45 mm thickness. Duty must be assessed on them. The transaction value shown in the invoice of the appellant is not for goods of this thickness but it was for goods of 0.3 mm thickness. The invoice produced by the appellant, therefore, does not correspond to the goods.
15. The transaction value can be rejected under Rule 12. If the proper officer has some reason to doubt the truth and accuracy of the transaction value he can call for information and on receiving such information or if the information is not provided, the proper officer still has a reasonable doubt about the truth and accuracy of the transaction value, it shall be deemed that the valuation cannot be done as per the transaction value. The discrepancy between the goods declared and goods actually imported gave the officer reason to doubt the transaction value and the owner of the appellant firm was summoned who, in his statement, admitted the It is not the case that the appellant had provided any invoice for the goods which were actually imported, .i.e., those whose thickness was 0.38 mm to 0.45 mm. We, therefore, find that the officer had reasonable doubt regarding the truth and accuracy of the transaction value and has correctly rejected it.
16. Having rejected the transaction value under Rule 12, he found that there were no imports of identical goods and hence the value could not be determined under Rule 4 and therefore, proceeded to determine it under Rule 5. These proposals were incorporated in the SCN and the appellant was given adequate opportunity to submit its defence. We, therefore, find no force in the submission of the learned counsel for the appellant that the adjudicating authority should have determined the value under Rule 4. When it is specifically recorded that there were no imports of identical goods and the appellant also did not produce any evidence to the contrary till now, Rule 4 could not have been and has correctly not been applied. Consequently, the value was determined under Rule 5.
17. In view of the above, we find that the Commissioner (Appeals) was correct in upholding the OIO insofar as the rejection of the transaction value under Rule 12 and its redetermination under Rule 5 are concerned.
18. Next is the question of confiscation of the goods under section 111(m) of the Act and imposition of redemption fine under section 125 of the Act in lieu of confiscation. Section 111(m) of the Act reads as follows:
111. Confiscation of improperly imported goods, etc.—The following goods brought from a place outside India shall be liable to confiscation:—
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(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;
19. The imported goods did not correspond in thickness with the description made in the Bill of Entry and therefore, they are squarely covered by section 111(m) of the Act and have been correctly confiscated by the adjudicating authority. Having confiscated the goods, he allowed their redemption on payment of redemption fine of Rs. 6,50,000/-, which, in our opinion, is fair considering the value of the goods at Rs. 98,83,894/- .
20. Penalty under section 112 of the Act can be imposed for acts or omissions which rendered the goods liable to confiscation under section 111(m) of the Act. The appellant had, by mis-declaring the nature of the goods in the Bill of Entry, rendered them liable to confiscation and therefore, the penalty of Rs. 3,00,000/- imposed on the appellant under section 112 of the Act is fair and proper.
21. Penalty can also be imposed under section 114AA of the Act and it reads as follows:
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.
22. The appellant had clearly made a declaration in the Bill of Entry which is false. The appellant’s contention is that it had no intention and it had actually ordered for goods of 0.3 mm thickness but its supplier had supplied goods of much higher thickness (and therefore of higher quality) but sent an invoice for goods of only 0.3 mm. This submission cannot be accepted. If anyone orders some goods and the seller delivers wrong goods, one will naturally return them. Instead, in this case, the appellant accepted the mistake and sought provisional release of the goods which were actually imported. This shows that wrong goods were not sent by the supplier and it is the appellant who made the wrong statement in the Bill of Entry and produced an invoice for the wrong goods to evade duty. The intention of any person can only be inferred from the facts of the case and the behaviour of the person. In this case, we have no hesitation in concluding that the appellant had intentionally mis-declared the nature of the goods in the Bill of Entry. Therefore, the penalty of Rs. 3,00,000/- each was correctly imposed on the appellant under sections 114AA and 112 of the Act.
23. In view of the above, we find no error in the impugned order of the Commissioner (Appeals) upholding the OIO. The appeal is dismissed and the impugned order is upheld.
(Order pronounced in open court on 04/11/2024.)
Notes:
1 impugned order
2 OIO
3 appellant
4 SCN
5 SIIB
6 CRCL
7 the Act
8 Valuation Rules
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