By TIOL News Service

CHENNAI, NOV 17, 2014: ON the basis of information that the respondent importer imported a consignment declaring the same as secondary/ defective Tin Free Sheets, whereas the actual goods were Tin Sheets, the Directorate of Revenue Intelligence searched the factory premises of the importer and seized coils/sheets weighing 68.4 Mts. The live consignment imported was also examined and found to be containing Tin Sheets and not Tin Free Sheets.

Further investigation made by the Directorate of Revenue Intelligence revealed that the importer has also imported further consignments of Tin Sheets under the guise of Tin Free Sheets in five containers and they are lying at the port for clearance. For these five containers, no bill of entry was filed. The Bill of Lading and other documents revealed that the goods are Tin Free Sheets and the total weight was declared as 117.846 MTs. These goods were identified and detained.

The goods imported by the five containers are the subject matter of the present dispute. Since the importer had abandoned the goods under Section 23(2) of the Customs Act, 1962, the Commissioner ordered absolute confiscation of the goods and imposed penalty of Rs 2,00,000/- on the importer under Section 112(a) of the Customs Act, 1962. On appeal, the Tribunal set aside the penalty imposed. Aggrieved by the same, revenue preferred an appeal before the High Court with the following question of law:

"Whether the act of the importer in abandoning the goods landed at the harbour for clearance would not attract penalty on such importer as provided for under Sections 23(2) and 112 of the Customs Act?"

After hearing both sides, the High Court held:

Here is a case where the importer attempts to import goods one after the other and the investigation revealed that there is a clear intent to evade payment of duty. The importer realizing that he would suffer not only the consequences of confiscation, but penalty, has chosen not to file bill of entry for subsequent consignments and has proceeded to abandon the goods. From a reading of the statement recorded at the time of investigation, it is evident that the import was made with an intention to evade duty by clearing Tin Sheets of higher value by declaring them as Tin Free Sheets of lower value. There is also a clear admission that differential price was paid through other than banking channels. There is a clear admission that only on investigation, the importer tried to cover up the imports by seeking amendment to import documents.

Since the goods are attempted to be improperly imported and that has been admitted by the importer, the consequence by way of penalty would follow. The Tribunal fell into error by stating that merely because the goods have been abandoned and bill of entry has not been filed, it is not a case for imposition of penalty. The right of a person to abandon the goods and seek exemption from payment of duty is under Section 23(2) of the Act, but that does not absolve him of his liability to be proceeded against under the provisions of the Act for any violation which renders the goods improperly imported liable for confiscation. The penalty under Section 112(a) of the Act is in relation to such conduct of improper importation of goods.

In this case, the importer did not make a proper declaration in respect of the goods with intent to evade payment of customs duty and, therefore, the consequence of penalty will flow automatically. The Commissioner was justified in imposing penalty, though it is meager in the facts of the present case.

Thus, the High Court answered the question of law in favour of revenue.

(See 2014-TIOL-1971-HC-MAD-CUS)