Custom, Excise & Service Tax Tribunal
M/S Owens Corning Enterprises (India) ... vs Commissioner Of Customs (Export), ... on 11 March, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/228 & 224/08 (Arising out of Order-in-Original No. 66/2008 dated 11.2.2008 passed by the Commissioner of Customs (Export), Nhava Sheva). For approval and signature: Honble Shri P.G. Chacko, Member (Judicial) Honble Shri Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== 1. M/s Owens Corning Enterprises (India) Pvt. Ltd. 2. M/s Tricon Shipping Pvt. Ltd. Appellants Vs. Commissioner of Customs (Export), Nhava Sheva Respondent Appearance: Shri M. Balagopal, and Shri T. Viswanathan Advocate for Appellants Shri Manish Mohan SDR for Respondent CORAM: SHRI P.G. CHACKO, MEMBER (JUDICIAL) SHRI SAHAB SINGH, MEMBER (TECHNICAL) Date of Hearing: 11.03.2011 Date of Decision: 11.03.2011 ORDER NO. WZB/MUM/2011 Per: P.G. Chacko
M/s Owens Corning Enterprises (India) Pvt. Ltd. (hereinafter referred to as importer) imported Copcentra Multiaxial Warp Knitting Machine (capital goods) from a German company under EPCG Scheme and filed a Bill of Entry on 24.2.2006 for its clearance at the concessional rate of duty of 5% in terms of Notification No. 97/04-Cus. The value of the goods declared in the Bill of Entry was EUR 5,85,890/- based on the suppliers invoice No. 95572 dated 30.12.2005. EPCG licence dated 10.2.2006 was produced by the importer. The assessing authority permitted clearance of the goods against payment of duty at the aforesaid concessional rate under the EPCG scheme. Accordingly, the duty was paid on 27.2.2006 and the capital goods cleared for home consumption. However, the consignment was intercepted by officers of Customs within the port premises on the basis of intelligence to the effect that the value of the goods had been misdeclared by the importer to evade payment of appropriate duty of Customs. When queried by the officers on the basis of documents including another invoice of the supplier bearing the same number and date but showing higher price of the goods (EUR 10,65,252/-), the importer admitted their mistake and came forward to execute a bond and furnish a Bank Guarantee to secure the revenue. Accordingly, Bank Guarantee for Rs.1,17,59,636/- valid upto 23.7.2007 was furnished and a Bond for an amount of Rs.1,89,02,069/- was also executed by the importer. Against this security, the capital goods were provisionally released. Subsequently, a show-cause notice was issued to the importer and their CHA (i) seeking to deny the benefit of the Notification to the importer and recover differential duty from them and (ii) proposing confiscation of the goods under Section 111 (m) & (o) of the Customs Act, 1962 and imposition of penalties on the importer and the CHA under Section 112 of the Act. These proposals were contested. In adjudication of the dispute, the Commissioner of Customs - (a) confirmed the demand of duty amounting to Rs.2,02,52,069/- against the importer after rejecting the declared value of the goods and quantifying the amount of duty on the basis of EUR 10,65,252/-, (b) ordered confiscation of the goods under Section 111 (m) & (o) of the Customs Act with redemption fine of Rs.65 lakhs under Section 125 of the Act, and (c) imposed penalties of Rs.20 lakhs and Rs.10 lakhs respectively on the importer and the CHA under Section 112 of the Act. The appeals are against the Commissioners order.
2. Heard both sides.
3. Learned Counsel for the importer has referred to the various import documents as well as the statements of the importer and has submitted that there was no deliberate misdeclaration of value of the capital goods in this case and that the declaration of value as EUR 5,85,890/- based on an invoice of the supplier happened by inadvertent mistake. It is submitted that the proper invoice of the supplier bearing same number and date of the above invoice had already been filed before the DGFT in connection with application for EPCG licence and hence the same was not immediately available on the date on which the Bill of Entry was filed. Inadvertently, the other invoice showing the price as EUR 5,85,890/- was filed with the Bill of Entry and this value was declared in the Bill of Entry also. A letter-of-credit (LC) had been opened for the correct value viz. EUR 10,65,252/- and the Bond and Bank Guarantee (which were furnished to the assessing authority at the time of filing the Bill of Entry) were also for this value of the goods. In the statement given by the importer, the inadvertent mistake was readily admitted and, without unreasonable delay, the mistake was rectified by way of production of additional Bank Guarantee and Bond to secure the revenue. The differential amount of duty on the differential assessable value was also paid for provisional release of the goods. In these circumstances, it is argued, no mens rea can be attributed to the importer. It is further submitted that clause (o) of Section 111 was improperly invoked in the show-cause notice and by the adjudicating authority inasmuch as no breach of any condition of Notification No. 97/04-Cus was alleged or found. The only adverse finding recorded by the Commissioner is misdeclaration of value of the goods, for which clause (m) of Section 111 has been invoked. The learned Counsel submits that these circumstances would call for an order vacating the fine and penalty.
4. The learned SDR has reiterated the findings of the Commissioner. With regard to penalty, he submits that one can be imposed under Section 112 of the Act on the importer for valid reasons even in the absence of mens rea. Learned SDR has not disputed the basic facts of the case.
5. The learned Counsel for the CHA has also claimed consequential relief against the penalty imposed on them. The argument is that, if the importer did not have any intent to evade payment of duty, the CHA cannot be held to have abetted any offence of the importer. We have heard the learned SDR also, who has opposed the CHAs arguments.
6. After considering the arguments, we have found good case for both the appellants. The various documents and statements available on record would collectively indicate that the transactions are not vitiated by any element of mens rea. Apparently, only the correct value of the goods was placed before the DGFT by the importer in support of their application for EPCG licence. The letter-of-credit (LC) was opened also for the correct value. EPCG licence, LC, Bank Guarantee and Bond for correct value of the goods were filed with the assessing authority by the importer at the time of presenting the Bill of Entry. Apparently, there was no attempt to hide anything. Simply, it was an inadvertent mistake of the importer having declared in the Bill of Entry the lower price mentioned in another invoice of the supplier. The circumstances under which invoices showing different prices were issued by the supplier have also been satisfactorily explained by the importer. As a matter of fact, the intention of the importer has not been doubted before us. The transactions are, by and large, transparent. In the circumstances, the benefit of EPCG scheme cannot be denied to the importer.
7. However, the fact remains that a lower value than what was shown in the proper invoice of the supplier was entered by the importer in the Bill of Entry, which resulted in payment of duty at concessional rate on the declared value. Perhaps, given an opportunity, the importer could have applied for amendment of the Bill of Entry under Section 149 of the Customs Act, 1962. In the circumstances of this case, apparently, there was no such occasion for the importer inasmuch as the consignment was intercepted soon after the out-of-customs-charge order was issued. The subsequent conduct of the appellant has also been found to be straightforward. This, however, would not detract from the consequences arising under Sections 111 and 112 of the Customs Act. Wrong declaration of value of the imported goods would mean misdeclaration and the same would attract confiscation of the goods under Section 111(m) of the Act. As rightly pointed out by the learned Counsel, in the absence of breach of the Customs Notification, Section 111(o) could not have been invoked to confiscate the goods. Apparently, the fine was determined by the Commissioner by taking into account the confiscability of the goods under both clauses (m) and (o) of Section 111. Obviously, the quantum of fine needs to be reduced.
8. The importer, by misdeclaring the value of the goods in the Bill of Entry, rendered themselves liable to be penalized under Section 112 of the Customs Act. Whether they had any intention to evade payment of duty or not is immaterial as it is settled law that no mens rea is required for penalty under Section 112. The Commissioner imposed a penalty of Rs.20 lakhs on the importer. Obviously, it needs to be reduced in the circumstances already stated.
9. In the circumstances of this case, we reduce the quanta of fine and penalty to Rs.5 lakhs and Rs.1 lakh respectively. The importer shall pay these amounts at the earliest, whereupon the relevant Bank Guarantee shall be returned to them.
10. It goes without saying that the charges levelled against the CHA are not sustainable. One charge against them is that they did not obtain authorization from the importer. Another charge is that the CHA abetted the offence committed by the importer. As regards the first charge, it was, at best, a ground for action against the CHA under the Customs House Agents Licensing Regulations, 2004 rather than under Section 112 of the Customs Act. With regard to the second charge, we find that there is no question of holding the CHA liable to be penalized inasmuch as they cannot be held to have been abetted any offence of the importer. In the result, the penalty on the CHA stands vacated.
11. Appeal No. C/228/08 is disposed of in the aforesaid terms, while Appeal No. C/224/08 is allowed.
(Dictated and pronounced in Court)
(Sahab Singh) (P.G. Chacko) Member (Technical) Member (Judicial)
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