Commr. of Cus. (Imports) vs Nitish Tools (P) Ltd.

T.S. Sivagnanam, J.—This appeal by the Revenue is directed against the Final Order No. 85 of 2009, dated 13-1-2009 on the file of Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai [2009 (237) E.L.T. 482 (Tri.-Chen.)]. The appeal has been admitted on the following substantial question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the levy of penalty imposed under Section 112(a) of the Customs Act, 1962?"

The respondent/importer filed a bill of entry dated 3-1-2002 for clearance of Tungsten Carbide Tips Cutting Tools model/type YG15 K034 and declared the unit price at USD 6.63 per kg. Based on the recorded contemporaneous prices, the Department proposed to enhance the value to USD 11.06 per kg. The respondent/importer accepted the enhanced value. During the course of inspection, it was found that there was a difference between the gross weight and the net weight. The gross weight, was 1242.14 kg, whereas the net weight was only 600 kg. Thus, there was an excess quantity of 475.64 kg. The importer was directed to explain the difference and they pleaded that the supplier had dispatched excess quantity by mistake. The explanation given by the importer was not accepted. The importer requested the matter to be adjudicated without issuance of show cause notice and opportunity of personal hearing was afforded. The adjudicating authority after considering the submissions made held that the goods in question were liable for confiscation under Section 111(1) and (m) of the Customs Act, 1962 and the importer was liable for penalty under Section 112(a) of the Act. Accordingly, the goods were ordered to be confiscated and permitted to be redeemed on payment of redemption fine of Rs. 2,00,000/- under Section 125 of the Act and penalty of Rs. 50,000/- was imposed under Section 112(a) of the Act. Aggrieved by the said order, the respondent/importer filed appeal before the Commissioner of Customs (Appeals). The first appellate authority by Order dated 13-6-2002 dismissed the appeal holding that, the quantity imported under the bill is double than that mentioned in the bill of entry taken up for comparison and the unit, price has remained the same and importer having failed to produce any evidence to show as to how he had negotiated for unit, price of US$ 6.63 per kg when the value of identical imports made before and after his import, were at US$ 11.05 per kg. Aggrieved by such order, the importer preferred appeal to the Tribunal contending that there was no intention on the part, of the importer to mis-declare the quantity. As regards the value, the assessee contended that there was no evidence available with the Department to suspect the price declared by the importer and there was no justification to resort to contemporaneous import price. The importer also resisted the order imposing penalty. The Tribunal, after considering the case of the respondent/importer, upheld the finding as regards the confiscation of the goads under Section 111(1). As regards the charge of mis-declaration of the value of the goods, the Tribunal pointed out that the enhancement is only on the basis of higher contemporaneous import price and accordingly set aside the penalty and also for the same reasons reduced the redemption fine to Rs. 50,000/-. The revenue, being aggrieved by the order of the Tribunal setting aside the levy of penalty, has preferred the appeal and the same has been admitted on the above said question of law.

We have heard Mr. K. Mohnakumar, learned counsel appearing for the revenue and Mr. S. Jaikumar, learned counsel appearing for the first respondent.

Admittedly the importer accepted the enhanced value of the goods at USD 11.06 per kg. The Department relied upon the contemporaneous imports of the same product before and after the said import. It is to be noted that the contemporaneous imports was in respect of an identical product from the same country of origin though the supplier might have been a different entity. The importer was unable to satisfy by producing any record before the adjudicating authority or before the first appellate authority to show that they were able to negotiate a price at the rate of USD 6.63 per kg, when the price prevalent at the relevant point of time was more than USD 11 per kg. Since the importer has accepted the enhanced value, there was no contest on the said issue.

The next, question was with regard to the excess quantity. There was an excess quantity of 475.64 kg. The only explanation given by the importer was that the supplier by mistake had shipped the excess quantity. This contention was, rightly disbelieved by the authorities below as the importer was unable to substantiate the said contention by producing any materials. Therefore, the Tribunal rightly confirmed the order of confiscation, which has not been challenged by the importer.

In order to invoke Section 112(a) of the Customs Act, it is essential that a person, who in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or in terms of clause (b) of Section 112 acquires possession of or is in any way concerned in carrying, removing, depositing, keeping, etc., any goods which he knows or has reason to believe are liable to confiscation under Section 111.

The case on hand would fall within the ambit of clause (a) of Section 112. The importer has not challenged the order of confiscation. In such event, penalty would stand attracted in terms of sub-clause (iii) under clause (b) which states that in the case of goods in respect of which the value stated in the entry made under the Act is higher than the value thereof, the importer is liable for penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees which ever is the greater. The Tribunal, did not assign any specific reason for cancelling the penalty but pointed out that in every case of enhancement of value it cannot lead to an inference of misdeclaration of value. However, this finding appears to be inconsistent with the facts since the importer has not challenged the order of confiscation, which has been confirmed by the Tribunal also, wherein there is a clear finding that the importer was not able to satisfactorily explain the huge difference in quantity. Therefore, Section 112(a)(iii) stands attracted. Considering the facts that there is no challenge to the order of confiscation and the enhanced value has been admitted by the importer and the reduced redemption fine as reduced by the Tribunal has been accepted by the Department, we deem it appropriate that, a penalty of Rs. 10,000/- be imposed on the importer. Accordingly, the appeal filed, by the revenue is allowed in part. The Order of the Tribunal is set aside and the penalty of Rs. 10,000/- is imposed. However, there is no order as to costs.