2022 (6) TMI 827 - AT - Customs

Confiscation - levy of redemption fine and penalty - mis-classification of imported goods - calcium phosphate - Clerical mistake in the classification of goods - HELD THAT - There appears to be a genuine mistake in the nature of clerical mistake on the part of the Clerk of the appellant company. This fact is evident on the basis of record as the appellant has suo motu approached the Department for making necessary rectification in the Bill of Entry with regard to the classification and also offered to pay the differential duty. Such suo motu offer was made before the Department pointed out or issue of any notice to the appellant. Thus this is a case of simple clerical error and there is no case of contumacious conduct on the part of the appellant. Confiscation and penalty both under Section 112(a)(ii) and 114AA of the Act set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of redemption fine and penalty under Section 112(a)(ii) and Section 114AA

Analysis:
The case involved the imposition of a redemption fine of Rs. 12 lakhs and a penalty of Rs. 9 lakhs under Section 112(a)(ii) and Section 114AA, respectively. The appellant, a manufacturer of ceramic tableware, imported calcium phosphate but erroneously classified it under a different chapter heading due to a clerical error in the Bill of Entry. The appellant promptly self-discovered the error and notified the Revenue for rectification, offering to pay the differential duty. However, the Customs officers suspected deliberate misclassification to evade higher duties and seized the goods, imposing penalties and redemption fine.

The Additional Commissioner of Customs held that the appellant intentionally misclassified the goods, leading to confiscation under various sections of the Customs Act. Penalties under Section 112(a)(ii) and Section 114AA were imposed, along with a redemption fine. The appellant, despite admitting the error and agreeing to pay the differential duty, was penalized for deliberate mis-declaration.

On appeal, the appellant argued that it was a genuine clerical mistake made by a clerk, promptly rectified by the appellant without any dispute from the Customs Department. The appellant, a regular importer with necessary certifications, had no intention to evade duties. The appellant sought to overturn the order of confiscation, penalties, and redemption fine, emphasizing the lack of deliberate intent to underpay customs duty.

After considering the arguments, the Tribunal found that the error was a genuine clerical mistake, as evidenced by the appellant's proactive rectification before any notice from the Department. The Tribunal concluded that there was no deliberate misconduct on the appellant's part and set aside the order of confiscation and penalties under Section 112(a)(ii) and 114AA, granting relief to the appellant. The appeal was allowed, providing the appellant with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, recognizing the clerical error and lack of intentional mis-declaration. The decision highlighted the importance of prompt rectification and genuine intent in customs compliance, leading to the overturning of penalties and redemption fine imposed by the Customs authorities.