Commissioner of Customs Vs Balaji Overseas Etc. (Supreme Court of India)
Summary: Supreme Court dismissed the Customs Department’s appeals in Commissioner of Customs Vs Balaji Overseas Etc. solely on account of low tax effect. The Court recorded that, under the latest Circular dated 02.11.2023, the monetary limit for pursuing the appeals had been enhanced to ₹2 crore, whereas the amount involved in the cases was ₹1,28,73,481. Consequently, the appeals were dismissed having regard to the monetary threshold. The Supreme Court order did not adjudicate or reverse the substantive findings recorded by CESTAT in the underlying customs dispute.
Read CESTAT Judgment in this case: No Customs Penalty on Forwarding Agent Without Act of Omission or Commission: CESTAT Delhi
The underlying CESTAT proceedings arose from the import of two containers by M/s Balaji Overseas under Bill of Entry No. 3866704. Although A4 plain copy paper was declared, DRI examination detected a short quantity of the declared paper and substantial quantities of undeclared food supplements, including supplements containing beef protein. Revenue alleged misdeclaration of description, quantity and value and proposed confiscation, differential duty and penalties.
On valuation, CESTAT held that Revenue had wrongly valued food supplements of Chinese origin by relying upon data concerning goods manufactured in and imported from the USA. Such goods could not be treated as identical or similar goods for valuation under Rules 3, 4 and 5 of the Customs Valuation Rules, 2007. CESTAT therefore directed valuation of food supplements not containing beef under Rule 7 by the deductive value method.
CESTAT upheld absolute confiscation of food supplements containing beef and also upheld confiscation of food supplements not containing beef, though the latter were held redeemable on payment of duty. Confiscation of A4 copy paper was set aside. Since the Commissioner had not imposed any redemption fine, CESTAT also set aside appropriation of the bank guarantee towards redemption fine and directed adjustment of the encashed bank guarantee against customs duty and, if necessary, penalty.
CESTAT held M/s Balaji Overseas liable to penalty under Section 112(a) read with Section 114AA of the Customs Act, but restricted the penalty to 100% of the duty sought to be evaded as worked out under its valuation findings. The separate penalty imposed on partner Kshitiz Sharma was set aside because penalty had already been confirmed against the partnership firm. The ₹12.5 lakh penalty imposed on M/s Him Logistics Pvt. Ltd. was also set aside, CESTAT holding that the forwarding agent had committed no act of omission or commission attracting Section 112. Thus, Balaji Overseas’ appeal was partly allowed, while the appeals of Kshitiz Sharma and Him Logistics were allowed.
Cases Discussed
- CTO, Anti-Evasion-I, Alwar Vs Khandelwal Foods Products, 2018 (8) GSTL 112 (Raj.) – Relied upon by Revenue while contending that subsequent retraction did not nullify the evidentiary effect of the statement.
- Praveen and Shah, 2014 (305) ELT 480 – Relied upon by the appellants in support of the contention against imposing separate penalties on the partnership firm and its partner.
- Commissioner Vs Ruby Impex, 2010 (260) ELT 51 – Relied upon on the issue of separate penalties upon a partnership firm and its partner.
FULL TEXT OF THE SUPREME COURT OF INDIA ORDER
It is stated at the Bar that in terms of the latest Circular dated 02.11.2023, the monetary limit has been enhanced to Rs.2 crores. The appeal would have to be disposed of having regard to the said threshold limit as the amount in dispute in the instant cases is only Rs.1,28,73,481/- (Rupees One Crore, Twenty Eight Lakhs, Seventy Three thousand, Four Hundred and Eighty One Only).
In the circumstances, the appeals are dismissed owing to low tax effect.
Pending application(s), if any, shall stand disposed of.
The appeals are dismissed in terms of the signed order.
Pending application(s), if any, shall stand disposed of.
