Mis-declaration of Imported Baby Garments: CESTAT upholds Confiscation and Penalty [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench, upheld the confiscation and penalty imposed for the mis-declaration of imported baby garments. The Tribunal held that an importer cannot evade liability for incorrect declarations by attributing errors to the supplier, particularly when the importer has voluntarily admitted to the misdeclaration.

The appellant, M/s Anand Impex, imported baby garments and accessories such as blankets, frocks, and metal bottles. Based on specific intelligence, the Customs Department held the consignment for examination and found discrepancies in the declared quantities and tariff classifications (e.g., metal bottles were found to be vacuum flasks).

The Adjudicating Authority confirmed the differential duty demand, ordered confiscation with a redemption fine of Rs. 60,000, and imposed a penalty. The Commissioner (Appeals) upheld this order, prompting the current appeal.

The appellant’s counsel submitted that the quantity differences were minor (often less than two dozen) and resulted from the supplier's loading mistakes, lacking any intent to misdeclare. They argued that the declared value was wrongly rejected solely based on broad National Import Data Bank (NIDB) descriptions rather than proven "similar goods." They contended that transaction value should prevail over deemed value and challenged the legality of the confiscation and penalty under Sections 111 and 114A of the Customs Act.

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Shri Girijesh Kumar, the Departmental Representative, argued that the appellant had voluntarily waived the Show Cause Notice (SCN) and Personal Hearing (PH) and had accepted the re-valuation. Citing Commissioner of Customs (Import) Vs. Sodagar Knitwear, he argued, that the mis-declaration of description, quantity, and undervaluation was established. He asserted that the rejection of the declared value under Rule 12 and re-determination under Rule 5 of the Customs Valuation Rules, 2007, was justified.

The Division Bench of Ms Binu Tamta (Member Judicial) and Mr P.V. Subba Rao (Member Technical) observed that it was an undisputed fact that the goods were misdeclared regarding quantity, description, and valuation. The Bench noted that the appellant had admitted the mistake under Section 108 of the Customs Act, accepting full responsibility despite blaming the supplier.

Relying on the Commissioner of C.EX., Madras versus M/s Systems and Components Private Ltd, the Tribunal held that an admission made under Section 108 is a valid piece of evidence and need not be further proved.

The Tribunal stated that under the self-assessment regime, the importer bears the primary responsibility for declaring the correct quantity, quality, and description. It held that passing the blame to the supplier does not absolve the importer of their statutory liability to pay the correct duty.

While finding no reason to interfere with the confiscation order or the redemption fine, the Tribunal offered partial relief regarding the penalty. The Tribunal concluded that the appeal lacked merit and was dismissed. However, the penalty imposed under Section 114A was reduced by 25%, provided the amount is deposited within 30 days of the order's communication.

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