2020 (10) TMI 1138 - AT - Customs

Smuggling - Baggage Rules - high value electronic items like Mobile phone sets of different reputed brands Sandisk pen drives USB flash drives RAM cards Laptops Watches of foreign origin - Confiscation - Redemption Fine - Penalty - HELD THAT - The appellants have imported goods in violation of baggage rules and have also accepted the same in their respective statements. However it is to be seen as to whether the valuation adopted by the Department is in accordance with law and correct and as to whether the penalties were imposed in terms of Section 112 of the Customs Act 1962. The show-cause notice states that the value of the recovered goods has been ascertained on the basis of reference value found in different product websites as detailed in Annexure A. However on-going through the said Annexure it is seen that in fact there are 4 Annexures A B C and D for the goods seized from the 4 appellants respectively. On-going through such Annexure we do not find that though the Annexures contain details like description Model make country of origin. However the addresses of web sites from where the values are taken are not mentioned. Copies or screenshots of websites displaying the value of the products is not also made available. Similarly there was no reasoning for adoption of such values and the Rules under which the same is arrived at has been given either in the SCN or OIO. Confiscation - Redemption Fine - Penalty - HELD THAT - The value adopted by the department is neither logical nor rational and nor on any legal basis. Under the circumstances we find that while holding that the good are liable for confiscation and the appellants are liable for penalty under Section 112(b) the request for reducing the penalties can be accepted. Accordingly the redemption fines and personal penalties imposed on the appellants is reduced. Appeal allowed in part.

Summary

Issues:
1. Valuation of goods for penalty imposition under Section 112 of the Customs Act, 1962.
2. Consideration of goods as prohibited goods and imposition of penalties.
3. Compliance with principles of natural justice in the adjudication process.
4. Reduction of penalties based on valuation and circumstances of the case.

Analysis:
1. The case involved the interception of appellants at the airport with high-value electronic items not declared as personal baggage. The adjudicating authority confiscated the goods and imposed penalties under Section 112(a) and (b) of the Customs Act, 1962. The appellants challenged the penalties, leading to the present appeals.

2. The High Court set aside penalties imposed under Section 112(a) & (b) for alleged earlier imports, allowing the appellants to appeal against confiscation, redemption fines, and penalties. The Department valued the goods based on internet prices, while the appellants argued for lower market prices in India. The Department considered the goods as prohibited, justifying penalties under Section 112(i).

3. The Tribunal found discrepancies in the valuation process, noting the lack of website references, reasoning, or rules provided for the values adopted by the Department. This was deemed a violation of natural justice. However, the appellants did not press for revaluation at that stage, avoiding a remand for reconsideration.

4. Despite acknowledging the nature of the goods as smuggled and the liability for confiscation and penalties, the Tribunal found the valuation arbitrary and not legally sound. Considering the value dependency for penalties under Section 112, the Tribunal reduced redemption fines and personal penalties imposed on the appellants based on the flawed valuation. The final order specified reduced fines and penalties for each appellant.

In conclusion, the Tribunal disposed of all four appeals by reducing the penalties based on the flawed valuation process and the circumstances of the case, emphasizing the importance of adherence to legal principles and just imposition of penalties under the Customs Act, 1962.