Description of Imported Goods in Invoices Different from Bill of Lading, CESTAT Lowers Penalty for Negligence in Import Declaration Verification in Absence of Ulterior Motive or Malicious Intent [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench has reduced the penalty imposed for negligence in Import Declaration verification in the absence of Ulterior Motive or Malicious Intent on the part of the assessee.

The penalty was related to a case where the description of imported goods in invoices was found to be different from the information provided in the Bill of Lading.

The case centered around the consignment imported by M/s. Great Overseas and handled by the appellant, Caravel Logistics Pvt. Ltd., a logistics service provider based in Secunderabad, which had filed an Import General Manifest (IGM) on January 31, 2013, declaring the goods as “assorted chappals”, a description that matched the Bill of Lading.

However, in April 2013, a request was made by the proprietor of M/s. Great Overseas, Mr. M.A. Mujahid, to amend the IGM regarding the description and quantity of the goods.

The consignment remained uncleared at the Inland Container Depot (ICD) until July 2023 when it was finally inspected. The customs officials found that the goods inside the container were not assorted chappals as initially declared but instead comprised mobile spare parts and mobile accessories. The consignment was valued at Rs.4,58,25,512/- and was subsequently confiscated, with an option to redeem it upon payment of a redemption fine of Rs.45,00,000/-. Additionally, penalties were imposed on the appellant under section 112(b) and section 114AA of the Customs Act, 1962.

The appellant, Caravel Logistics Pvt. Ltd., represented by Mr. T.V. Suresh Kumar, argued that the customs department had failed to establish any wrongdoing on their part, asserting that they had relied on the information mentioned in the Bill of Lading at the time of filing the IGM.

The appellant maintained that the investigation did not uncover any specific involvement by them in the discrepancy. Consequently, the appellant urged that the penalties of Rs.2,00,000/- each imposed under sections 112(b) and 114AA of the Customs Act, 1962 should be overturned.

The respondent revenue, the Commissioner of Customs, represented by Mr. M. A. Surya, contended that the appellant had access to the overseas exporter’s invoice when they requested the IGM amendment. This invoice revealed that the contents of the container included items other than assorted chappals, which the appellant had failed to communicate to customs officials. It was only through a thorough container inspection that the presence of mobile accessories was revealed, leading the customs department to question the integrity of the appellant’s actions.

The respondent argued that the appellant’s role in the matter was not free from suspicion and therefore, the penalties should stand.

The CESTAT recognised that the appellant had initially filed the IGM based on the information available to them, including the description of “assorted chappals”, without any apparent ulterior motive. Subsequently, they sought the amendment solely based on instructions from Mr. M.A. Mujahid, the proprietor of M/s. Great Overseas, which was confirmed by recorded statements. The bench found no evidence of ulterior motives in their actions.

However, the bench noted that the appellant had been negligent in not questioning the importer about the discrepancy between the description in the invoice and the Bill of Lading.

The bench acknowledged that no malicious intent was evident on the part of the appellant, but noted that the appellant had displayed negligence.

The single bench of Mr. R. Muralidhar (Judicial Member) set aside the penalty imposed under section 112(b) and reduced the penalty imposed under section 114AA of the Customs Act, 1962 from Rs.2,00,000/- to Rs.50,000/- on the finding that while the appellant did not have any malicious intent, they had indeed been negligent in their responsibilities, which merited a penalty but at a reduced amount.

To Read the full text of the Order CLICK HERE

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