Custom, Excise & Service Tax Tribunal
Neno Crystal vs Commissioner Of ... on 6 April, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH, MUMBAI
Customs Appeal No. 87464 of 2017
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-507/17-18 dated
14.09.2017 passed by the Commissioner of Customs (Appeals), Mumbai Zone-III.)
M/s Neno Crystal ........Appellant
Shop No. 03, Sant Kabir Road,
Near Ganesh Hareware, 12,
Shree Ranchhod Nagar,
Rajkot, Gujarat - 360 003
VERSUS
Commissioner of Customs (Import), Mumbai ........Respondent
New Customs House,
Ballard Estate,
Mumbai - 400 001
APPERANCE:
Shri N.D. George, Advocate for the Appellant
Shri Bhushan Kamble, Assistant Commissioner, Authorised Representative
for the Respondent
CORAM:
HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL)
FINAL ORDER NO. A/85298 / 2022
Date of Hearing: 14.01.2022
Date of Decision: 06.04.2022
Confirmation of fine and penalty by the Commissioner of
Customs (Appeals), Mumbai Zone-III, at a reduced rate under
Section 125 and Section 112(a) of the Customs Act, 1962, while
setting aside other penal actions imposed vide Order-in-Original
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including redemption of bank guarantee etc., has been assailed by
the assessee in this appeal.
2. Factual backdrop of the case, in a nutshell, is that Appellant
M/s. Neno Crystal, an importer, filed Bill of Entry No. 2962644 dated
12.08.2013 for clearance of Chatons (Beads) of size SS-19 onwards
but on examination by the Expert, at the instance of Customs
Official, he found presence of SS-12 size Beads in the sample
examined by him, value of which is more than the declared size of
SS-19 onwards. Matter was adjudicated upon and the adjudicating
authority had held that the goods were liable for confiscation under
Section 111(m) of the Customs Act, 1962. He also re-determined
the value under Rule 5 of Customs Valuation Rules, 2007,
appropriated the Customs duty paid by and recovered from the
importer and allowed redemption of imported goods under Section
125 of the Customs Act against payment of fine of Rs. 20,00,000/-
as well as imposed penalty of Rs. 14,00,000/- on the Proprietor of
the firm.
3. Being aggrieved by the said order, Appellant-Proprietor of M/s.
Neno Crystal preferred an appeal before the Commissioner of
Customs (Appeals) Mumbai Zone-III who, in his reasoned order,
gave a finding that there was no deliberate undervaluation or mis-
declaration to avoid duty, no evidence concerning submissions of
false invoice by the importer, revaluation was done without
comparison of contemporary imports except the two Bills of Entry
submitted by the importer himself, for which he had accepted the
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claim of the appellant about classification, eligibility for exemption
from CVD with consequential relief of refund, placing his reliance on
the judgments of Hon'ble High Court of Mumbai in the case of
Starlite Corporation, Bombay Vs. UOI [1989 (39) ELT 538 (Bom.)]
and decision of this Tribunal at Bangalore in the case of VMB Impex
Vs. CCE [2015 (321) ELT 522 (Tri.-Bang.)]. Further, he had held
that allegations of under-valuation since is not backed by material
evidence, re-determination of value could be considered as
voluntarily statement of the importer under Section 108 of the
Customs Act, 1962 but ultimately he confirmed the confiscation order
despite explanation and evidence being submitted by the supplier
during investigation itself concerning wrong shipment by referring to
the judgment reported in 2013 (297) ELT 504 (Mad.) in the case of
Commissioner of Customs (Sea), Chennai-I Vs. M.R. Associates and
that of the Hon'ble Supreme Court passed in the case of Chariman
SEBI Vs. Sri Ram Mutual Fund reported in 2006 (5) SCC 361, by
holding that establishment of mens rea is not essential for imposing
penalty for breach of "Civil Obligations". However, he reduced the
fine and penalty amount substantially by holding that it should be
commensurate with the offence committed by the Appellant and not
to be harsh or excessively disproportionate. The legality of
confirmation of fine and penalty is only assailed in this appeal.
4. During the course of argument learned Counsel for the
Appellant Mr. N.D. George submitted that in view of the findings of
the Commissioner (Appeals) referred above and in the absence of
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margin of profit being worked-out so as to impose fine to wipe-out
the margin of profit basing on Board's formula imposition of
redemption fine would have no legal basis. Further, he also argued
that in view of the decision of VMB Impex cited supra after
exemption is granted from payment of CVD and enhancement of
value being based on voluntary statement under Section 108 of the
Customs Act, 1962 as well as in view of the judgment of Hon'ble
High Court of Madras in the case of Commissioner of Customs (Sea),
Chennai-I Vs. M.R. Associates cited supra, the ratio which was
wrongly applied by the Commissioner (Appeals) holding justification
for confiscation under Section 111(m) of the Customs Act, 1962,
confiscation and penal provision invoked by the Commissioner
(Appeals) would not sustain if the findings of the said judgment of
the Hon'ble Madras High Court is meticulously studied, for which he
sought for interference of this Tribunal in setting aside the fine and
penalty confirmed by the Commissioner (Appeals), though at the
reduced rate.
5. Learned Authorised Representative for the Respondent-
Department Mr. Bhushan Kamble, in response to such submissions,
had argued in favour of the reasoning and rationality of the order
passed by the learned Commissioner (Appeals) and stated that it has
been consistently held by Hon'ble Supreme Court in several of
judgments referred in para 12 and 13 of the Commissioner
(Appeals)'s order that mens rea is not a precondition for imposing
penalty for breach of "Civil Obligations" and fine is imposed to wipe-
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out the margin of profit and therefore the Commissioner (Appeals)
had rightly confirmed fine and penalty while reducing its quantum, so
as to make it commensurate to the offence committed that needs no
intervention by this Tribunal.
6. I have heard submissions from both the sides. It would not be
inappropriate to mention here that the Appellant's case is squarely
covered by the judgment of Hon'ble Madras High Court in
Commissioner of Customs (Sea), Chennai-I Vs. M.R. Associates cited
supra wherein it was clearly held that enhancement of value based
on voluntary statement concerning acceptance of value, may be for
early clearance of goods, would not invoke penal provisions nor
confiscation of goods can be made in lieu of redemption fine, and
learned Commissioner (Appeals) has placed his reliance heavily on it
but erroneously understood that in the said judgment there was
confirmation of confiscation and redemption fine. Further, as could
be noticed that the judgment of Hon'ble Supreme Court concerning
non-availability of guilt mind was not a precondition for breach of
"Civil Obligations" is also not placed in its proper perspective. The
meaning of "Civil Obligations", in the legal parlance, is performance
of certain action under the obligation of law which gives right of
enforcing its performance to the other person in case of violation. In
the instant case, as could be seen from the case record, Appellant
had filed Bill of Entry on the basis of the item description mentioned
by the supplier in the import document and had agreed to pay duty
on the enhanced value after the same was found to be item of
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different size. Learned Commissioner (Appeals) had observed in
unequivable terms that the same importer i.e. Appellant had cleared
some goods at or around the same time at higher rate for which
"deliberate undervaluation or mis-declaration to avoid duty is
farfetched" (underlined to emphasize). More importantly, he had
also observed that in valuation of imported goods, there is no place
for minimum Customs value but appellant preferred not to challenge
the departmental action. Therefore, it cannot be said that appellant
had made a tie or contract for payment of higher value, so as to
make him liable for violation of "Civil Obligations" for the purpose of
imposing penalty on him and it has been settled through judicial
precedent that voluntarily acceptance of higher value and willingness
to pay the duty at the enhanced rate would exempt the Appellant
from liability of confiscation and redemption fine [Commissioner of
Customs (Sea) judgment, cited supra]. Hence the order.
ORDER
7. The appeal is allowed and Order-in-Appeal No. MUM-CUSTM- AMP-APP-507/17-18 dated 14.09.2017 passed by the Commissioner of Customs (Appeals), Mumbai Zone-III order to the extent of confirming reduced fine for confiscation and penalty are hereby set aside.
(Order pronounced in the open court on 06.04.2022) (Dr. Suvendu Kumar Pati) Member (Judicial) Prasad