M/s. Naam Exports Vs. Commissioner of Customs- Customs

IN THE CUSTOMS, EXCISE & SERVICE

 TAX APPELLATE TRIBUNAL, CHENNAI

 

Legal Robe 40822 of 2021

(Arising out of Order-in-Appeal No.15/2021-TTN(CUS) dated 14.7.2021 passed by the Commissioner of GST & Central Excise (Appeals), Coimbatore)

M/s. Naam Exports

Vs.

Commissioner of Customs

 

APPEARANCE:

 

Shri A.K. Jayaraj, Advocate for the Appellant Ms. Sridevi Taritla, ADC (AR) for the Respondent

CORAM

Hon’ble Ms. Sulekha Beevi C.S., Member (Judicial)

 

 

Final Order No. 40151 / 2022

 

Date of Hearing : 04.05.2022 Date of Decision: 05.05.2022

Brief facts are that the appellant had filed three shipping bills all dated 23.10.2018 through Customs Broker for export of 33 MTs of big onions to Sri Lanka declaring the total FOB value as Rs.8,58,598.54 claiming drawback of Rs.1,288/-. After examination of the cargo by the shed officers, the goods regarding two shipping bills were stuffed into the container. The cargo for the third shipping bill was being stuffed into the container at the CFS. On specific intelligence that the goods meant for export might have been in excess quantity, the cargo was recalled and was examined by the SIIB officers. On examination, it was found that the weight of the cargo was 44.5 MTs as against the weight declared as 33 MTs. The entire cargo of 44.5 MTs was seized under mahazar on 23.10.2018 on the reasonable belief that the exporter had attempted to export illicitly by misdeclaring the quantity of the goods in the shipping bills. The details are as under:-

SB No./ Date	Description of cargo	Declared quantity (in Kgs.)	Actual quantity (in Kgs.)	Declared Value (Rs.)	Actual Value (Rs.)
8402858,	Big Onions	33000	44,500	8,58,599/-	13,35,000/-
8402954
8403075 all
dated
23.10.18

5. The appellant vide letter dated 24.10.2018 requested to release the cargo provisionally and the request was accepted. Later vide letter dated 27.1.2019, the appellant requested to decidethe case without issuing Show Cause Notice and personal hearing. The matter was thus taken up for adjudication. The adjudicating authority vide order dated 12.2.2020 rejected the declared value and redetermined the value of 44.5 MTs of big onions at Rs.13,35,000/- under Rule 4 of Customs Valuation (Determination of Value of Export Goods) Rules, 2007. He ordered for confiscation of the goods under sec. 113(h) of the Customs Act, 1962 with option to redeem the same on payment of redemption fine of Rs.3,33,750/-. A penalty of Rs.3,33,750/- was imposed under sec. 114(iii) of the Customs Act, 1962 and same amount of penalty was imposed under sec. 114AA of the Act  The appeal preferred by the appellant against the said order before the Commissioner (Appeals) was dismissed. Hence the appellant is before this Tribunal.
6. The learned counsel Shri K. Jayaraj appeared and argued for the appellant. He submitted that the appellant has admitted the excess quantity as alleged by the department and is not contesting the redetermination of value of the goods in the present appeal. The contest is confined to the redemption fine and the penalties imposed. The authorities below did not properly consider the explanation given by the appellant for the excess weight of the goods. Since onion is a perishable commodity and the weight will decrease on drying before the cargo reaches the destination port, they had taken excess quantity in order to compensate the weight loss on account of drying of the onion. The said fact has not been disputed by the department. Further, the appellant has not made any monetary benefit out of the excess quantity declared. There was no export incentive received by the appellant by declaring excess quantity of the goods. This being so, the penalties imposed are too high and harsh on the appellant. Considering the fact that no motive was alleged or proved by the authorities below, the appellant deserves to be treated leniently.
7. The adjudicating authority has imposed a redemption fine of Rs.3,33,750/- under sec. 113(h) of the Customs Act, 1962. The value redetermined was Rs.13,35,000/-The declared value was8,58,599/-.  Thus,  the  value  short  declared  was Rs.4,76,400/-. Out of this short declared value, the profit margin that would have been earned by the exporter would be around 10% excluding the cost of purchase and this would be around Rs.48,000/-. Therefore, the redemption fine should have been in and around Rs.48,000/- only. The redemption fine imposed has no correlation with the profit margin as stated in section 125 of the Customs Act, 1962.
8. In the present case, no monetary benefit is alleged or proved by the department. It shows that the offence of misdeclaration has no monetary consideration and that there is no extra profit involved by misdeclaring the cargo which is a perishable cargo. In view of the same, the redemption and the penalties ought to have been set  aside. He prayed that the appeal may be allowed.
9. The learned AR  Sridevi Taritla supported the findings in the impugned order.
10. Heard both sides. 
11. At the outset, it has to be stated that the appellant is not contesting the redetermination of the value of the goods. Consequently, the order of confiscation requires no interference. The contest in the present appeal is confined to the redemption fine and the penalties  The goods have been confiscated under section 113(h) of the Customs Act, 1962 which reads as under:-
12. h) any goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;

[(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under section 77;

[(ii) any goods entered for exportation under claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under this Act in relation to the fixation of rate of drawback under section 75;]”

9. The appellant has misdeclared almost 11 MTs of  The explanation given is that onion being a perishable commodity, they have loaded excess quantity to compensate the weight loss on account of drying of the cargo. Though such an explanation cannot be accepted when the excess quantity is so huge, it has to be seen that the redemption fine for the excess value of Rs.4,76,400/- is too high. The authorities below have imposed a redemption fine of Rs.3,35,750/-. In my opinion, since the cargo is of perishable in nature, the profit margin would be very less. The redemption can be reduced to Rs. One lakh. The impugned order is modified to the extent of reducing the redemption fine to Rs. One lakh only.
10. The appellant has argued to set aside the penalty imposed under 114(iii) and 114AA of the Customs Act, 1962. Section 114(iii) reads as under:-

“(iii) In the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.”

11. The said section states that the penalty imposed is not to exceed the value of the goods as declared by the exporter or the value as determined under the Act whichever is  For these reasons, I find that the penalty imposed under sec. 114(iii) does not require any interference.

12. An equal penalty has been imposed under  114AA. The said section reads as under:-

“If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.”

13. On perusal of the orders passed by the authorities below, nothing is brought out to prove and establish that the appellant has knowingly and intentionally made any false documents. It is explained by them that the excess quantity was loaded in order to compensate the loss on account of drying of the onion which are perishable goods. Taking these facts into consideration, the penalty imposed under sec. 114AA is set aside.
14. In the result, the impugned order is modified to the extent of reducing the redemption fine from Rs.3,33,750/- to Rs.1,00,000/- (Rupees one lakh only) and setting aside fully the penalty imposed under  114AA of the Customs Act, 1962. The appeal is partly allowed with consequential reliefs, if any.

(Pronounced in open court on 05.05.2022)

 

 

 

 

 

(SULEKHA BEEVI C.S.)

Member (Judicial)

Rex