Legal principle

Payment of differential duty before issuance of the show cause notice does not bar imposition of penalty where undervaluation by suppression/fraud is established, but confiscation and redemption fine cannot be sustained where the imported goods are no longer available for confiscation.

Court decision

The Tribunal upheld the impugned order in its entirety — value re-determination, differential duty, interest under section 28AB, and penalties under sections 114A, 112(a) and 114AA on both appellants — but set aside the confiscation of the goods and the redemption fine. Appeal C/1187/2012 (I.G. International) was partially allowed to that limited extent, and Appeal C/1188/2012 (Gian Chand Arora) was dismissed.

Facts

M/s I.G. International and Shri Gian Chand Arora imported apples from M/s Dovex Export Co and M/s Oneonta Trading Corporation (USA) through JNCH Nhava Sheva and Chennai Port. DRI investigations in India and the USA, including documents obtained from US Customs through the Consulate General of India, New York, revealed that the values declared at Indian customs were lower than the actual invoices declared to US Customs across fifteen consignments. A show cause notice dated 31.03.2009 proposed rejection of declared value, differential duty under the proviso to section 28(1), interest under section 28AB, confiscation under sections 111(d)/(m), and penalties under sections 112, 114A and 114AA. The Commissioner (Import), Nhava Sheva, re-determined values under rule 10A of CVR, 1988 r/w section 14, confirmed duty of Rs 41,99,410 (Nhava Sheva) and Rs 9,79,807 (Chennai) with interest, imposed penalty under section 114A on the firm, penalties of Rs 4,00,000 and Rs 1,00,000 under section 112(a) and 114AA on both appellants, and appropriated Rs 60 lakh deposited during investigation.

Key provisions

• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 28(1), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 28A, Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 28AB, Customs Act, 1962 — [Omitted] ****
• Section 107, Customs Act, 1962 — Power to examine persons