Judgment:
1. Both the appeals are directed against Order-in-Original No.14/2002-CAU, dated 28-1-2002 by which the Commissioner has passed the following order : (i) I confiscate the goods valued at Rs. 14,58,842/- covered under Bill of Entry No. 36803, dated 14-7-97 under Section 111(m) of the Customs Act, 1962. However, I allow them to be redeemed on payment of redemption fine of Rs. 1,50,000/- (Rupees one lakh and fifty thousand only) under Section 125 of the Customs Act, 1962.
(ii) I hold that the goods cleared under previous Bills of Entry totally valued at Rs. 13,21,82,873/- are liable to confiscation under Section 111(m) of the Customs Act, 1962. The goods are not available for confiscation. However, considering the duty sought to be evaded, I impose a fine of Rs. 5,00,000/- (Rupees five lakhs only) in lieu of confiscation.
(iii) I demand duty of Rs. 16,73,368/- under proviso to Section 28(1) of the Customs Act, 1962 from M/s. Comptech Electronics Pvt.
Ltd., Chennai.
(iv) Out of the total duty demanded, an amount of Rs. 2,48,409/-became liable to be paid after 28-9-96, the date on which Section 114A of Customs Act came into force. They are therefore liable to a penalty under Section 114 to this extent. Accordingly, I impose a penalty of Rs. 2,48,409/- (Rupees two lakhs forty-eight thousand four hundred and nine only) on M/s. Comptech Electronics P. Ltd., Chennai under Section 114A of the Customs Act, 1962.
(v) In regard to goods imported prior to 28-9-96, I hold that the importers are liable to a penalty under Section 112(a) of the Customs Act, 1962. Accordingly, I impose a penalty of Rs. 3,00,000/- (Rupees three lakhs only) under 112(a) of the Customs Act on them.
(vi) I impose a penalty of Rs. 1,00,000/- (Rupees one lakh only) on Shri Vikas Chandra, Managing Director, M/s. Comptech Electronics P. Ltd., Chennai under Section 112(a) of the Customs Act, 1962.
(vii) I order that the payment of Rs. 14,00,000/- made by M/s.
Comptech Electronics P. Ltd., Chennai be adjusted for the differential duty amount. The Bank Guarantee may be enforced for recovery of balance duty, fine and penalty.
(viii) I order that PD Bond and Bank Guarantee executed by M/s.
Comptech Electronics, Chennai be enforced to recover the duty, fine and penalty.
2. Aggrieved by this order, the appellants have come in appeal on the ground that they had imported electronic components under Bill of Entry No. 36803, dated 14-7-99 from M/s. IT Pal Co. Ltd., Taiwan vide Invoice No. 970619 dated 19-7-97. The total value was declared as Rs. 14,58,482/-. The Bill of Entry was assessed after classifying the electronic components viz. ICs, Connectors, diodes, transistors, CRT 14" and plastic moulded parts under their appropriate heading based on the declarations made by the importers. The factory premises of the importer was searched on 18-7-97 by officers of DRI and it was found that there was another packing list indicating package-wise details of components in 155 packages serially numbered from 001 to 155 while totally 163 packages were declared to customs under Bill of Entry No.36803, dated 14-7-97. The examination of the goods revealed that package Nos. 1, 2, 3 and 4 contained ICs, diodes, transistors and connectors respectively. The packages 5-11 contained CRT 14" colour.
Only packages numbered 12 to 111 were found to contain plastic moulded components for computer monitors while the declaration in the Bill of Entry indicated that packages 12 to 163 contained plastic moulded components. The package No. 112 to 155 were found to contain other components like unpopulated PCBs, Resistors, Degaussing Coil, Power Cords, head sink, user manual, etc. The packages 156 to 163 were found to contain Pentium Mother Boards and glue sticks. Shri Vikas Chandra, Managing Director, M/s. Comptech Electronics P. Ltd., Chennai in his statement dated 18-7-97 stated that in respect of import of colour monitors from M/s. IT Pal Co., the items like unpopulated PCB, resistors, variable resistors, capacitors, coils, transformers, fuse, wire, core bead, switch, jumper cords, CRT socket and miscellaneous mechanical parts were not declared as such but declared as plastic parts. He also admitted that 100 Mother Boards with 256 Cache without CPU were also imported and were not declared. He further admitted that he had also imported one consignment of 100 Mother Boards under Bill of Entry No. 27492, dated 27-5-97. Shri Vikas Chandra, Managing Director of M/s. Comptech Electronics P. Ltd in his further statement dated 23-7-97 also stated that the original packing list for the present consignment was 10 pages long giving details of small items like resistors, capacitors, screws, nuts, PCBs, coils, wires, etc. contained in the consignment in 155 packages. The packing list submitted to Customs contained only major and high value items like ICs, diodes, connectors, CRTs with deflection yoke and plastic moulded parts. The remaining items were omitted since they were minor and of low value and for operation convenience and to avoid lengthy and cumbersome packing list. He further submitted that he was aware of that these items fall under Customs Tariff Headings attracting different rates of duty.
Detailed investigations were conducted by the DRI and a total differential duty amount of Rs. 1,85,02,508/-was calculated for the imports from all the four suppliers for the period from 1992 onwards.
The importers paid Rs. 14,00,000/- towards duty liability immediately.
In view of the misdeclaration of description and value the goods were liable for confiscation under Section 111(m) of the Customs Act, 1962 and they were liable for penalty under Section 112(a) of the Customs Act, 1962.
3. The goods seized under Bill of Entry No. 36803, dated 14-7-97 were provisionally released except the Pentium Boards in terms of PD Bond for Rs. 20,00,000/- with bank guarantee for Rs. 2,00,000/- executed by them.
4. They were also issued with show cause notice to M/s. Comptech Electronics P. Ltd. asking them to show cause as to why the consignment covered under Bill of Entry No. 36803, dated 14-7-97 should not be confiscated under Section 111(m) of the Customs Act, 1962 and why penalty should not be imposed on them under Section 112(a) of the Customs Act, 1962 and why the value should not be appraised in respect of all the components under Rule 8 of the Customs Valuation Rules, 1988 in respect of different suppliers for the present and past imports.
They were also asked to show cause as to why a short-levied duty of Rs. 1,85,02,508/- should not be demanded under proviso to Section 28(1) of the Customs Act, 1962 and the goods imported during the past period should not be held for confiscation under Section 111(d) and (m) of the Customs Act, 1962. They were further asked to show cause as to why penalty should not be imposed on them under Section 112(a)/114A of the Customs Act, 1962 and 112(b) on Shri Vikas Chandra, Managing Director.
The payment of Rs. 14,00,000/- made by them towards deposit was proposed to be adjusted towards duty liability.
5. Appearing on behalf of the appellants, Shri V.S. Venugopalan, Advocate submitted that only 100 Nos. of Pentium Boards was not declared and was not assessed. Similarly small items like diodes, etc., valued at only US$ 8 was not declared. But these items were declared instead of giving individual prices and description, their value was mentioned in the total value. He further submitted that it is for operational convenience not to give individual declaration but the value was included in the invoices and therefore there is no question of misdeclaration. He further submitted that Shri Vikas Chandra vide his letter dated 20-12-97 stated that he was forced to pay Rs. 14.00 lakhs under threat and coercion and had requested for refund of the amount. He further submitted that there was no double invoices issued and revised invoices were given by the suppliers on their request as desired by the customs. He further submitted that these goods could not be declared by them because they were not aware whether the small goods were also packed inside the consignment. He further submitted that there was no incriminating document received during the search. It is only the packing list one was with the container and the other was submitted along with the Bill of Entry with the customs. The value of such items which are not individually declared is hardly 7% of the total value and is very marginal and such marginal difference is required to be ignored. He also submitted that the order of the Commissioner confiscating the goods to the value of Rs. 14,58,482/- whereas the goods valued at only Rs. 3,68,064/- were found to be not declared. The Commissioner's order of confiscating the total consignment is not proper and it cannot be held that the misdeclaration was against the whole consignment. He also submitted that the goods, which were abandoned by them after clearance from customs duty should not have been charged on them as they had not redeemed these goods on payment of fine and therefore no duty can be demanded on goods which have not been redeemed by them. Ld. Advocate also submits that only those goods which do not correspond in respect of value or in any other particular entry like the undeclared Pentium board and kit items not individually declared, the Commissioner should not have taken all the items of the bill of entry and its total value for the purpose of confiscation and levy of redemption fine. He therefore submitted that since the value of the confiscable goods was only Rs. 3,68,064/- for which the redemption fine under Section 125 would work out to Rs. 37,854/- and not Rs. 1.50 lakh which is abnormal and has to be rectified as per the working sheet submitted by them. He further submitted that the Commissioner has committed the same mistake of taking the full value of the bills of entry of all the goods cleared previously for five years totally valued at Rs. 13,21,82,873/- instead of taking only the value of infringed/confiscable goods either undeclared or items not individually declared, the value of which is Rs. 1,09,98,628/- as per Section 111(m) of the Customs Act, 1962. This error led to an abnormal levy of fine of Rs. 5.00 lakhs instead of the proportionate levy of fine of Rs. 42,606/- and hence not tenable. He further submitted that the correct duty as per the work sheet is only Rs. 15,75,235/- and not Rs. 16,73,368/-. He further submitted that it was only to avoid paper work the small valued items of kit were not individually declared but the value was included in another item. As in the case of pentium mother board the supplier had sent them freely for trial purpose which was not declared and this mistake was without any mala fide intention on their part.
6. SDR Smt. Bhaghya Devi invited our attention to the findings recorded by the Commissioner in Paras 22 to 37 and submits that the DRI had found that there was two invoices bearing the same serial number No.970619 dated 19-6-97 raised by M/s. IT Pal & Co., Taiwan which contained two sets of description and items. The one disclosed to customs contained major items and other contained a number of minor components in addition to the items already declared to customs. She further submitted that to evade of customs duty, they had not individually declared the items as they were to fall under different tariff heading and were to be assessed on merit individually as per the rates prescribed in the individual tariff heading which has been admitted by them through their Managing Director Shri Vikas Chandra who had also admitted that he was aware of the different rates of duty on individual items. She further submitted that the adjudicating authority have held that the importers have not declared the goods like resistors, capacitors, transformers, unpopulated PCBs, etc., in the bills of entry though individual values were available in the invoices supplied by the manufacturers. She further submitted that the items like resistors, transformers, etc., attract higher rates of duty than ICs. It was therefore incorrect to club the items in such a manner for the purpose of assessment since Section 19(b) of the Customs Act, 1962 which provides for highest of such rates to be adopted in the event of such clubbing of articles. To that extent, it was clear that there was misdeclaration before customs for assessment and extended time period as per proviso to Section 28(1) of the Customs Act, 1962 was invocable.
She, therefore, submitted that the consignment covered under bill of entry No. 36803, dated 14-7-97 is liable to confiscation under Section 111(m) of the Customs Act, 1962. The goods imported earlier were also liable for confiscation under Section 111(m) of the Customs Act, 1962 but since they are not available for confiscation and importers are liable for penalty under Section 112(a) of the Customs Act, 1962. She also submitted that 26 bills of entry were filed after the introduction of Section 114A of the Customs Act, 1962. This resulted in short collection of duty to the extent of Rs. 2,48,409/- and hence the importers are liable to penalty under Section 114A of the Customs Act, 1962 to this extent. Shri Vikas Chandra, Managing Director was also responsible for the import of components for monitor in such a manner which led to evasion of customs duty and he is liable for penalty under Section 112(a)/112(b) of the Customs Act, 1962, contended Id. SDR. Ld.
SDR relied on the Hon'ble Supreme Court's judgment rendered in the case of Weston Components ltd. v. CC, New Delhi as reported in 2000 (115) E.L.T. 278 (S.C) wherein it has been held that the redemption fine is imposable even after release of goods on execution of bond and if subsequent to the release of the goods import was found not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods under Section 125 of the Customs Act, 1962. She also invited our attention to the judgment rendered by the Hon'ble Madras High Court in the case of Dadha Pharma Private Ltd. v. Secretary to the Govt of India as reported in 2000 (126) E.L.T. 535 (Mad.) in which it has been held that action can be taken under Section 112 of the Customs Act, 1962 even if goods are not available for confiscation.
7. We have considered the submissions made by both sides and have examined the records and the impugned order. We are inclined to agree with the Id. Advocate that goods valued at Rs. 3,68,064/- which were not declared to the customs alone are liable for confiscation under Section 111(m) and not the entire goods valued at Rs. 14,58,482/-. We therefore reduce the redemption fine from Rs. 1.50 lakh to Rs. 85,000/-. The order of the Commissioner confiscating the goods of Rs. 13,21,82,873/- which were not available for confiscation as they have been cleared long back cannot be sustained in view of the well settled legal position and the law laid down by this Bench in number of cases and by various coordinated Benches. We have in the matter of Prudential Pharmaceuticals Ltd. v. CC, Chennai as reported in 2001 (136) E.L.T.1057 (Tri. - Chennai) have held that redemption fine is not imposable when goods are not available for confiscation and is outside the purview and legal provisions as contained under Section 125 of the Customs Act, 1962. Similarly, the Northern Bench in the matter of Mazagon Dock Ltd., Mangalore v. CC, Bangalore as reported in [1990 (47) E.L.T. 620 (T) = 1990 (28) ECR 423 (CEGAT, SBC)] has held that there can be no confiscation or redemption fine imposed on goods not available for confiscation. The judgments cited by the Revenue are pertaining to the imposition of penalty even if the goods are not available for confiscation as they are liable for confiscation. They are not talking about the confiscation and imposition of redemption fine on the goods which are not available for confiscation. Therefore no contrary judgment by Revenue has been placed before us to support their contention that goods can be confiscated and redemption fine can be imposed even if the goods are not available for confiscation.
Another judgment cited by the Revenues for provisional release of the goods by execution of bonds and it is only in such cases where the goods have been released provisionally on execution of bond that goods can be confiscated and redemption fine can be imposed. We therefore set aside the order of the Commissioner of confiscating the goods valued at Rs. 13,21,82,873/- under Section 111(m) of the Customs Act, 1962 which were cleared long back and which were not available for confiscation.
We also set aside the order of imposition of fine of Rs. 5.00 lakhs in lieu of confiscation. The appellants had deposited a sum of Rs. 14.00 lakhs as per the direction of DRI but are being consistently maintaining that the goods which have been abandoned by them and not redeemed, no duty can be demanded from them. We are inclined to agree to the contention of the Advocate and we therefore direct the Commissioner not to charge any duty on the goods which were confiscated but not redeemed. To that extent the duty should be deducted and refund granted them suo motu. As regards mandatory penalty of Rs. 2,48,409/- imposed under Section 114A of the Customs Act, 1962, we reduce the same to Rs. 1.25 lakh. As regards the imposition of penalty for the goods imported prior to 28-9-96 we confirm the penalty of Rs. 3.00 lakhs imposed under Section 112(a) of the Customs Act, 1962 on the appellant-assessee. As regards the penalty of Rs. 1.00 lakh on Shri Vikas Chandra, Managing Director, M/s. Comptech Electronics P. Ltd., Chennai under Section 112(a) of the Customs Act, 1962, we find that the penalty of Rs. 1.00 lakh is on the higher side and we reduce the same to Rs. 25,000/-.
8. We confirm the rest of the order passed by the Id. Commissioner. But for the above modification, the impugned order is sustained. Ordered accordingly.