Whether confiscation and penalty warranted where there was mistake in filing Bill of Entry?

PJ/Case Laws/2012-13/1301

Case:- C. C., NEW DELHI Vs THE ENERGY RESOURCES INSTITUTE

Citation:- 2012 (282) E. L.T. 135 (Tri. – Del.)

Brief Facts:- The Assessee are a research institute and have filed Bill of Entry through his Customs House Agent for clearance of one spectrophotometer. The Bill of Entry was assessed by the Computerized Risk Management System accepting the assessment as declared in the Bill of Entry filed and for clearance of goods without examination and Order for out-of-charge was given and gate pass was also issued by the custodian of goods. At the time of taking delivery, it was noticed that the packet contained two spectrometers instead of one declared in Bill of Entry and for this reason importer requested for amendment of the Bill of Entry to include the extra goods. Actually, the supplier had given 2 invoices but the assessee while authorizing the CHA to file Bill of Entry had given only one invoice which resulted in wrong declaration in the quantity of goods and the value of goods. Treating this as mis-declaration in the Bill of Entry, the adjudicating officer confiscated the excess goods valued at Rs. 5,03,475/- and allowed the goods to be redeemed on payment of redemption fine of Rs. 1 lakh and imposed penalty of Rs. 50,000/- on the importer under section 112(v)(b) of the Customs Act, 1962. Aggrieved by the order, the appellant filed an appeal with the Commissioner (Appeals). The Commissioner (Appeals) found it to be a case of genuine mistake and ordered that there was no case for confiscation of goods and he set aside the redemption fine imposed. Further, he reduced penalty from Rs. 50,000/- to Rs. 10,000/-. Therefore, the present appeal has been filed by the Revenue.

Appellant Contentions:- The appellant has filed the appeal considering that the order of the Commissioner (Appeals) is not legal and proper. Revenue is arguing that the importer failed to make a truthful declaration in the Bill of Entry and the declaration filed by the Appellants was not correct. Revenue argues that mens rea is not necessary for confiscating the goods under Section 111. Revenue's case is that once the Bill of Entry filed did not include all the goods and since value of the consignment also was not declared correctly the goods were to be confiscated whether or not the Appellants had an intention to evade customs duty.

They rely on the decision of the Apex Court as follows:

M/s. Jain Exports Pvt. Ltd. - 1993 (66) E.L.T. 537 (S.C.)

Pine Chemical Suppliers - 1993 (67) E.L.T. 25 (S.C.)

and argue that even when mens rea is not there the goods are liable to be confiscation and the Commissioner (Appeals) has erred in his order and therefore the same may be set aside.

Respondent Contentions:- The Respondent submits that supplier had given two invoices but the appellant had given only one invoice to the Customs House Agent which resulted in wrong declaration in the quantity of the goods and the value of the goods and that there was no intention to evade duty and the same occurred merely on account of mistake.

Reasoning of Judgment:- We have considered arguments on both the sides. We note that the issue involved in the case of M/s. Jain Exports was that the importer had not met the licensing requirement. In the case of Pine Chemical Suppliers the matter involved a misdeclaration in the grade of the goods imported and here an error in filing Bill of Entry which error was detected before taking delivery of goods. The Commissioner has already held that the situation arose out of bona fide error. So considering the overall facts of the case, we do not find it necessary to interfere with the order. There is an issue that a penalty is imposed under Section 112 when confiscation was not ordered under Section 111 and to that extent the order is not legal and proper. Considering the fact that the importer has not challenged the penalty imposed, thus the appeal filed by Revenue is rejected.

Decision: - Appeal Rejected.

Comment:This case lays the foundation of the fact that mens rea is necessary for ordering confiscation of goods and imposing high penalty. Confiscation of goods cannot be made merely on account of bonafide mistake on the part of importer.

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PJ/Case Laws/2012-13/1301

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