2012 (10) TMI 425 - HC - Customs

Mis-declaration in exporting the non-Basmati Rice - reredemption fine and penalties - Held that - There is clear and unambiguous admission to the misdescription of the goods. It was not case of classification or any dispute with regard to description, which was required to be sent for the final reference to DGFT, or to some other laboratories. The Tribunal proceeded on the basis that there was no dispute to the nature and quality of goods, which was not non-basmati rice. If the petitioner had any grievance with regard to non-consideration of matter on merits, the point should have been taken in the Tribunal itself. Having failed to do so, the appellant cannot be allowed to canvass the point in the High Court in an appeal under Section 130 of the Act. The redemption fine has been imposed at 10% of the penalty under Section 114 (5) on the ground that the goods were not exported and that containers did not go out of India & the penalty under Section 114 (i) have been imposed reasonably at Rs.6,90,000/-, which is 5% of the amount of penalty awarded by order in original - Thus the redemption fine and penalties were not levied only on confession & the customs authorities relied on test reports, which were not denied nor any objections were filed - against assessee.

Summary

Issues:
- Imposition of redemption fine and penalties under the Customs Act, 1962 for mis-declaration in exporting non-Basmati Rice.
- Lack of jurisdiction by Customs Authorities in determining mis-declaration.
- Reliance on test reports from accredited laboratories.
- Opportunity for appellants to object to reports and cross-examine individuals.
- Confessional statements under Section 108 of the Customs Act.
- Dispute over mis-description of goods and admission by the petitioners.
- Consideration of redemption fine and penalties by the Tribunal.

Analysis:
The judgment by the Allahabad High Court dealt with four appeals under Section 130 of the Customs Act, 1962 arising from a common order passed by the Customs, Excise and Service Tax Appellate Tribunal. The issue revolved around the imposition of redemption fines and penalties for mis-declaration in exporting non-Basmati Rice, which was prohibited from exports by a government notification. The petitioners were found to have attempted to export non-Basmati Rice mis-declared as Basmati Rice, leading to the imposition of consequences by the Adjudicating Authority.

The Customs Department conducted tests on the rice samples, which were found to be non-Basmati Rice according to the Basmati Export Development Foundation. The petitioners admitted to exporting non-Basmati Rice as Basmati Rice, acknowledging the mis-declaration. The Customs Authorities imposed penalties based on the test reports and confessional statements recorded under Section 108 of the Customs Act, without allowing the appellants to object to the reports or cross-examine individuals involved in the process.

The appellants argued that the Customs Authorities lacked jurisdiction to determine mis-declaration without referring the matter to the Directorate General of Foreign Trade (DGFT). They also raised concerns about the test reports not being obtained from accredited laboratories and the denial of opportunities for objections and cross-examination. The Tribunal, however, found no dispute regarding the nature and quality of the goods, leading to the imposition of redemption fines and penalties at reduced rates based on market values.

In the High Court, the appellants contested the redemption fines and penalties, claiming lack of jurisdiction and procedural irregularities. The Court upheld the Tribunal's decision, noting the appellants' admission to mis-declaration and the leniency shown by the Tribunal in imposing penalties. The Court dismissed the appeals, finding no grounds for interference in the matter and upholding the redemption fines and penalties imposed by the Tribunal.

Overall, the judgment highlights the importance of adherence to procedural requirements, jurisdictional considerations, and the reliance on valid evidence in cases involving mis-declaration and imposition of fines and penalties under the Customs Act, 1962.