By TIOL News Service

CHENNAI, APR 04, 2015: THE respondent is engaged in import of films used in cars. Proceedings were initiated by DRI on the ground that the importer had under-declared the quantity of the film imported in the Bill of lading. The assessee however, did not file any Bill of Entry even after two months from import. The original authority confiscated the goods under Section 111(f) and 111(i) of the Customs Act, 1962 and imposed penalty on the importer under Section 112(a).

Aggrieved by the said order, the imported filed an appeal before the CESTAT. The Tribunal allowed the appeals holding that the importer never filed any Bill of Entry declaring the value and other particulars of the goods. The Tribunal further held that the order of the Commissioner who sustained the absurdity of the DRI proceedings by an even absurd order has to be set aside.

Now, revenue is in appeal before the High Court against the order of Tribunal.

After hearing both sides, the High Court held:

In paragraph 13.2 of the order of the Commissioner, there is a clear finding that the dutiable goods, without being mentioned properly in the import manifest, were found concealed with an intention to evade payment of duty. This act of the asssessee /respondent is revealed in the course of investigation and by various conducts, as has been observed by the Adjudicating Authority. When the conduct of the assessee is to evade payment of duty, the provisions of Section 111(f) and 111(i) of the Customs Act get attracted even prior to the filing of Bill of Entry. It is not necessary that the Bill of Entry should be filed and that is a precondition for proceeding against a person, who is an importer, as defined under Section 2(26) of the Customs Act, 1962.

Once, the respondent falls within the scope of definition of importer and there is a violation of Section 111(f) and 111(i), the proceedings are justified and the order of the Commissioner, is in order.

The Tribunal erred in holding that since no Bill of Entry is filed to clear the subject import, there is no case of mis -declaration. The commissioner has not proceeded on the basis of Section 111(d) of the Customs Act. The Tribunal, however, misconstrued the appeal as one filed by the respondent in a case falling under section 111(d) which is not correct. It is a case of confiscation by invoking the provisions of Sections 111(f) and 111(i). Enormous material has been culled out by the Commissioner to justify invocation of Sections 111(f) and 111(i). The reasons given by the Commissioner on the basis of the admitted fact/statements and the documents established a case that the importers have, in fact, involved themselves in such an import which renders the goods liable for confiscation under sections 111(f) and 111(i) of the Customs Act. The Tribunal misdirected itself by holding that there is no question of mis -declaration as contemplated under Section 111(d), when the Commissioner has not proceeded with the matter in terms of Section 111(d) of the Customs Act. Hence, the Tribunal order is erroneous.

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 and liable for confiscation. The penalty under Section 112(a) of the act is in relation to such conduct of improper importation of goods.

Section 112 of the Act stands clearly attracted to the case of improper importation of goods by any person. The key words of Section 112(a) of the act are that in relation to any goods, if any person does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111 of the Act, he shall be liable to pay penalty. In this case, the importer did not make a proper declaration in respect of the goods with an intent to evade payment of customs duty and, therefore, the consequence of penalty will flow automatically. The Commissioner was justified in imposing penalty.

(See 2015-TIOL-818-HC-MAD-CUS)