Custom, Excise & Service Tax Tribunal
Anand Mahindra vs Commissioner Of Customs (Import), ... on 13 February, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/1236/06 (Arising out of Order-in-Original No. 109/2006/CAC/CC(I)/AKP/Gr.VB dated 28.8.2006 passed by Commissioner of Customs (Import), Mumbai) For approval and signature: Hon'ble Ms. Jyoti Balasundaram (Vice President) and Hon'ble Mr. A.K. Srivastava, 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 :
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?
====================================================== Anand Mahindra Appellant Vs. Commissioner of Customs (Import), Mumbai Respondent Appearance: Shri S.N. Kantawala, Advocate, for appellant Shri Ajay Saxena, Authorised Representative (SDR), for respondent CORAM: Hon'ble Ms. Jyoti Balasundaram, Vice President and Hon'ble Mr. A.K. Srivastava, Member (Technical) Date of Hearing: 23.1.2008 Date of Decision: 13.2.2008 ORDER NO................................. Per: Ms. Jyoti Balasundaram, Vice President
Vide the impugned order, the Commissioner of Customs has enhanced the CIF value of secondhand sailboat imported by the appellant herein to Rs.1,68,01,785/- (US$ 3,63,675/-), rejecting the declared value of Rs.1,21,32,120/- (US$ 2,60,000/-), and directed assessment of bill of entry accordingly, confiscated the yacht under the provisions of Section 111(d) for want of specific licence required for import of secondhand goods, Section 111(f) for non-filing of IGM for the vessel and Section 111(m) for undervaluation, with an option to redeem the same on payment of a fine of Rs.25,00,000/- and has also imposed a penalty of Rs.5,00,000/- upon the importer under Section 112(a) of the Customs Act, 1962.
2. We have heard both sides.
3. The import of the secondhand yacht is restricted as per para 2.17 of the Foreign Trade Policy, 2004-09 and since the importer did not possess a specific import licence, we uphold the liability of the vessel to confiscation under the provisions of Section 111(d) of the Act. As regards Section 111(f), we note that the steamer agents, M/s. Sea Waif, filed an IGM dated 1.4.2006 for the vessel M.V. Dreamcatcher, declaring nil cargo and subsequently, vide letter dated 25.4.2006, they applied for amendment to the IGM seeking an additional entry converting the said vessel as cargo on the ground that it had since been sold to a buyer in India, although it had earlier arrived as a visiting yacht. The IGM was then permitted to be amended. The statutory provisions governing filing of IGM are contained in Section 30 of the Customs Act, 1962 which makes it mandatory for every person in charge of a vessel to file an import manifest. The Import Manifest (Vessels) Regulations, 1971 cover the format and procedure to be followed for filing import manifest in respect of goods coming by sea and as per Regulation 5, details of cargo to be landed should be declared in the cargo declaration. Clause (3) of Section 30 provides that the proper officer may permit amendment to the import manifest if he is satisfied that there was no fraudulent intention. In this case, the application for amendment was allowed and the amendment carried out. In these circumstances, no contravention of Section 30 has been made out so as to warrant confiscation of the vessel under Section 111(f) of the Customs Act. Accordingly we set aside the confiscation under the above mentioned provision.
4. As regards Section 111(m), we find that the Commissioner has relied upon information downloaded from internet regarding sale of similar vessels (45' Prout Cataraman) at much higher prices. The Commissioner has subsequently verified the submission of the importer that Dreamcatcher Prout 1996 model valued at US$ 4,59,000/- (relied upon by the Revenue) was not sold in 2004, as claimed by the Revenue, and it was still shown as available for sale on the website and the importer's contention was accepted. Further, in its reply dated 19.7.2006, the importer has enclosed information downloaded from the website on prices of different sizes of Prout Cataraman boats including those of 45' Prout and it is seen that the prices fluctuate, for example, the price quoted on the internet for a 1995 model of 45' Prout Cataraman is US$ 3,10,000/-, while the price shown for a similar model of 1996 make is US$ 2,74,900/-. There are several reasons for price fluctuation, viz. seaworthiness, maintenance and upkeep since the launch of the vessel, number of storms weathered or voyages undertaken etc. Reliance on internet information for upholding charge of underinvoicing cannot be sustained in the light of Tribunal's orders in Aggarwal Distributors (P) Ltd. vs. CC, New Delhi 2000 (117) ELT 49, India Campus Crusade For Christ vs. CC, New Delhi 2006 (206) ELT 342, Eastern Exports & Imports Co. vs. CCE, Kolkata 2007 (209) ELT 459 and CC, Cochin vs. Rushabh Plastics 2007 (211) ELT 400. The second piece of evidence relied upon by the Commissioner to conclude that the boat was underinvoiced is that the vessel itself was insured for US$ 3,50,000/-, which is a good reflection of the actual price of the goods. However, this factor is not relevant for determining undervaluation as held by the Tribunal in the case of Orient Enterprises vs. CCE, Cochin 1986 (23) ELT 507 and Nina Chaka Pvt. Ltd. vs. CC, New Delhi 2004 (163) ELT 464. Since the finding of undervaluation is based only on internet information and the amount for which the vessel has been insured, and reliance on both has already been rejected by the Tribunal in the decision cited supra, we hold that there has been no contravention of the provisions of Section 111(m).
5. No reasons have been adduced by the Commissioner for imposition of a heavy fine of Rs.25 lakhs, which was vehemently assailed by the appellant. Section 125(2) of the Customs Act, 1962 casts a duty upon an adjudicating authority to furnish reasons for imposing a specified amount by way of redemption fine. The power to impose such fine is a discretionary one and it has to be exercised on the existence of relevant factors such as market survey, margin of profit etc. In view of the fact that we have set aside the finding of violation of the provisions of Section 111(f) and (m) and are only upholding the liability to confiscation for contravention of the provisions of Section 111(d), we reduce the fine imposed upon the appellants to Rs.5,00,000/-, keeping in view the fact that the vessel was for his personal use, and further noting that specific import licence would have been granted to him by the DGFT on his applying for the same.
6. As regards penalty, although there can be no quarrel with the proposition that existence of mens rea is not necessary for imposition of penalty, it is well settled that it is not mandatory and it depends upon the facts and circumstances of every case. In Hindustan Steel Ltd. vs. State of Orissa 1978 (2) ELT (J 159) (SC), the apex court held that the discretion to impose a penalty must be exercised judicially and that the penalty 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. The judgment of Hindustan Steel has been followed subsequently by the apex court in Akbar Badruddin Jiwani vs. CC 1990 (47) ELT 161 (SC) by setting aside the fine and penalty arrived at by the Tribunal. In the present case, the Commissioner has found that mens rea was present, since the importer did not disclose the insured value of the yacht on the GATT declaration form attached to the bill of entry, even though the insured value had a bearing on the value for customs purposes. Since we have already held that the insurance value has no bearing on valuation for assessment by customs, we set aside the finding that the importer had a guilty mind. Although mens rea is not required for imposition of penalty under Section 112(a) of the Act, we agree with the appellant that imposition of penalty is not mandatory and it depends upon the facts and circumstances of each case. This case does not involve payment of differential duty as the charge of undervaluation resulting in short payment of duty of Rs.17,77,184/- has been set aside. The contravention of Section 111(f) has also been held to be unsustainable. The only contravention upheld is that of Section 111(d). We note that specific import licence was available and would have been issued to the appellant on his applying for the same. In these circumstances, we are of the view that no penalty is called for in this case, and accordingly set it aside.
7. In the result, the impugned order is modified to the extent indicated above. The appeal is thus partly allowed.
(Pronounced in Court on 13.2.2008) (A.K. Srivastava) Member (Technical) (Ms. Jyoti Balasundaram) Vice President tvu 1 6