Custom, Excise & Service Tax Tribunal
M/S. Prashray Overseas (P) Ltd vs Cc, Chennai on 17 September, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/338/2006
(Arising out of Order-in-Appeal No. C.CUS.456/06 dated 12.06.2006 passed by the Commissioner of Customs (Appeals), Chennai).
For approval and signature
Honble Shri P. KARTHIKEYAN, Member (Technical)
__________________________________________________
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M/s. Prashray Overseas (P) Ltd., : Appellant
Vs.
CC, Chennai : Respondent
Appearance Shri B. Satish Sundar, Adv., for the appellants Shri M.K.A.K. Mohiddin, JDR, for the respondent CORAM Shri P. KARTHIKEYAN, Member (Technical) Date of hearing : 17.09.08 Date of decision : 17.09.08 Final ORDER No._____________/2008 This appeal filed by M/s. Prashray Overseas (Pvt.) Ltd., seeks to vacate a fine of Rs. One lakh it was ordered to pay to redeem a consignment of silk imported by it and a penalty of Rs.25,000/- imposed on it. The appellant had imported a consignment of Mulberry Raw Silk (MRS) weighing 9138.87 kgs and filed Bill of Entry No.808229 dated 20.05.05. The consignment comprised 15 lots and was declared to be of 4A grade in the Bill of Entry. On test, two lots weighing 1216.67 kgs were found to be of grade 2A. After due process the original authority confiscated the two lots of 2A grade silk u/s 111 (m) of the Customs Act, 1962 (the Act). He ordered redemption of the above goods (Value Rs.9,34,706/-) on payment of a fine of Rs.One lakh and imposed a penalty of Rs. 25,000/- on the appellants u/s 112 (a) of the Act. The original authority also demanded Anti Dumping Duty (ADD) due of Rs. 2,66,658/- on the 1216.67 kgs of silk which was found to be of 2A grade. The appellants contested the fine and penalty on the ground that they had declared the description of the consignment imported as per their purchase order and the shipping documents of the supplier. It is their consistent claim that there was no deliberate mis-declaration of the description of the consignment under import. Only a small portion, namely 13.3%, of the consignment imported was found to be of 2A grade. As there was no finding of mens rea by the lower authorities, the fine and penalty ordered by the lower authorities deserved to be vacated. The Ld Counsel relied on the judgment of the Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa - 1978 (2) E.L.T. (J 159) (S.C.) = 1970 (1) SCR 753 in support. He also cites a decision of this Tribunal in Chamundi Textiles Silk Mills Ltd. Vs. CC, Chennai reported in 2005 (180) ELT 135 (Tri.-Chen.) to strengthen the claim that confiscation and penalty were not warranted when the importers bonafides were not in question and on test the declaration made by it based on suppliers documents was found to be incorrect.
2. Ld. JDR reiterates the findings of the Commissioner in the impugned order. He invites my attention to the finding of the Commissioner to the effect that the consignments imported were of various grades. It was ascertained on test that the goods were of 2A, 3A and 4A grades. Chinese supplier had issued 15 CIQ certificates which had shown the goods under import to be 4A or 5A grade. The appellants had not declared the description consistent that the CIQ certificates received from the supplier. The Commissioner found that the test results spoke volumes of CIQ certificates and the supplier.
3. I have studied the case records and submissions made by both sides. The importer had declared the description of the goods as appearing in the invoice covering the transaction. On test it was found that a small portion of the consignment was 2A grade whereby it attracted also ADD. In the facts of the case it cannot be held that the importer had deliberately misdeclared the description of the goods to avoid paying ADD found payable on a portion of the consignment. In the circumstances, the fine of Rs. One lakh ordered to redeem the offending goods which attract ADD of Rs. 2,66,658/- and penalty of Rs. 25,000/- are excessive. However, the fine and penalty have been imposed in accordance with law as found by the Commissioner. The case law cited by the Ld. Counsel ie., Chamundi Textiles Silk Mills Ltd. Vs. CC, Chennai pertains to a case of import of goods which were found to attract confiscation under Section 111 (d) on test. As per the declaration in the Bill of Entry, goods were freely importable and also had not attracted ADD. On test of the samples, goods were found to be a grade below 3A as against the declared 4A grade. The importer sought to re-export the consignment and the revenue filed an appeal against the re-export of the goods allowed by the Commissioner (A). The Tribunal found that a letter the importer had written to the indenting agent of the supplier supported its claim of bonafide. The Tribunal accordingly vacated the order of confiscation and penalty. The facts of the case relied on are not identical to the facts of the subject case.
3.1 There is no adequate evidence to categorically hold that the declaration made in the Bill of Entry was not made bonafidely. The lower authorities had not found that the importer in this case had willfully misdeclared the description of the imported goods. Both the lower authorities found that after one of a sample each drawn from two lots was found to be 2 A grade as against the declared 4A grade, at the request of the importer, samples were drawn from the remaining lots when, one more sample was found to be of 2A grade. The Commissioner found that the importer could not shift the blame for misdeclaration or any other lapse to the suppliers as the importer benefited by declaring the grade to be one which did not attract ADD. He also found that mens rea was not essential to impose fine and penalty.
3.2 I find that a penalty is called for only when there is a finding of dishonest or contumacious conduct by the assessee/importer. As there is no finding of mens rea, penalty of Rs. 25,000/- imposed under Section 112 is not justified though the statute provides for imposition of penalty.
3.3 As the offending goods are liable for confiscation, fine is justified in law. A fine for redemption of goods confiscated levies a monetary charge on the importer of the goods confiscated. Redemption fine also serves the same purpose as a penalty on the importer. Therefore, considerations that weigh against the penalty imposed under Section 112 of the Act should govern also the fine imposed. In the absence of a finding of willful mis-declaration of the offending goods as falling under grade 4A to evade payment of ADD, a nominal fine should suffice. A fine of Rs.25,000/-, I find, will more than meet the ends of justice in this case.
4. I find that in the Akbar Badruddin Jiwani Vs Collector of Customs reported in 1990 (47) E.L.T. 161(SC), the Apex Court observed as under:
58. In the present case, the Tribunal has itself? specifically stated that the appellant has acted on the basis of bona fide belief that the goods were importable under OGL and that, therefore, the Appellant deserves lenient treatment. It is, therefore, to be considered whether in the light of this specific finding of the Customs, Excise & Gold (Control) Appellate Tribunal, the penalty and fine in lieu of confiscation required to be set aside and quashed. Moreover, the quantum of penalty and fine in lieu of confiscation are extremely harsh, excessive and unreasonable bearing in mind the bona fides of the Appellant, as specifically found by the Appellate Tribunal.
59.We refer in this connection the decision in? Merck Spares v. Collector of Central Excise & Customs, New Delhi - 1983 E.L.T. 1261, Shama Engine Valves Ltd. Bombay v. Collector of Customs, Bombay - 1984 (18) E.L.T. 533 and Madhusudan Gordhandas & Co. v. Collector of Customs, Bombay - 1987 (29) E.L.T. 904 wherein it has been held that in imposing penalty the requisite mens rea has to be established. It has also been observed in Hindustan Steel Ltd. v. State of Orissa - 1978 (2) E.L.T. (J 159) (S.C.) = 1970 (1) SCR 753 - by this Court that:-
The discretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
60. In the instant case, even if it is assumed for arguments sake that the stone slabs imported for home consumption are marble still in view of the finding arrived at by the Appellate Tribunal that the said product was imported on a bona fide belief that it was not marble, the imposition of such a heavy fine is not at all warranted and justifiable.
61. In the premises aforesaid, we allow the appeal and set aside the judgment and order passed by the Appellate Tribunal and directs the Tribunal to release the goods to the appellant forthwith. The above observations support the prayer of the appellants against the fine and penalty. The appellants shall be entitled to consequential relief.
(Order dictated and pronounced in the open Court) (P. KARTHIKEYAN) MEMBER (T) BB ??
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