Bona fide supplier mis-shipment without importer misdeclaration does not justify confiscation, redemption fine, or penalty.

M/s Embelle Trading imported assorted goods under Bill of Entry No. 8542068 dated 30 October 2023, including plastic motorcycle tail boxes, children’s garments, girls’ and children’s panties, and amplifiers. During 100% examination, the declared quantity of 46,200 girls’ and children’s panties was found to comprise 1,22,400 men’s undergarments. The amplifiers were found not to bear the requisite BIS markings and excess spare parts were also detected. Testing showed that the textile goods did not contain prohibited Azo dyes.

The department rejected the declared transaction value and re-determined the assessable value through market survey under the Customs Valuation Rules, 2007. It also proposed confiscation for alleged misdeclaration, non-compliance with BIS requirements, and failure to meet Legal Metrology labelling requirements.

The adjudicating authority confirmed differential duty of Rs. 41,57,657 with interest, confiscated specified goods, imposed redemption fines of Rs. 2,00,000 and Rs. 3,50,000, and imposed a penalty of Rs. 5,00,000 under Section 112(a) of the Customs Act, 1962. The Commissioner (Appeals) upheld the order, leading to the present appeal.

Whether the enhancement and re-determination of the value of the imported goods, and the consequential adjudged demands, were legally sustainable under the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Whether confiscation of the imported goods and imposition of redemption fines and penalty under the Customs Act, 1962 were sustainable where the incorrect shipment resulted from a bona fide mistake by the foreign supplier.

The Tribunal applied Rule 12 of the Customs Valuation Rules, 2007 for rejection of declared transaction value and Rules 7 and 9 for re-determination of value.

Confiscation was considered under Sections 111(d), 111(l) and 111(m), and penalty under Section 112(a) of the Customs Act, 1962.

The Tribunal also considered the BIS requirements applicable to amplifiers, the Legal Metrology (Packaged Commodities) Rules, 2011, DGFT Notification No. 44 (RE-2000)/1997-2002, and JNCH Public Notice No. 33/2012, which permitted mandatory labelling compliance before clearance from customs control.

CBEC Circular No. 4/2015-Customs dated 20 January 2015 was relied upon for the principle that goods imported under a bona fide mistake may be permitted to be re-exported on merits.

The Tribunal also followed Ocean Sky Impex Pvt. Ltd. v. Commissioner of Customs, 2024 (387) E.L.T. 76 (Tri.-Mad.), recognising that bona fide wrong shipments by foreign suppliers may be released or re-exported without unjustified confiscation or penalty.

The Tribunal accepted the importer’s explanation that the foreign supplier had mistakenly loaded men’s undergarments intended for another consignee and had acknowledged the error and sought their return.

Since the imported goods corresponded with the supplier’s invoice and import documents, and the department produced no independent evidence of intentional misdeclaration, fraud, suppression, or an attempt to evade duty, the difference in goods could not be treated as deliberate misdeclaration or misclassification by the appellant.

The absence of Azo dyes further removed any impediment to clearance on payment of appropriate duty.

As regards Legal Metrology compliance, the Tribunal held that labelling deficiencies could be rectified before clearance with the requisite permission, particularly because the goods had been examined by the department before the importer could seek such permission.

The Tribunal nevertheless recognised that the amplifiers, lacking compulsory BIS registration and failing the applicable standards, were non-releasable and could be re-exported subject to the redemption fine already imposed.

Applying CBEC Circular No. 4/2015 and Ocean Sky Impex, the Tribunal concluded that the bona fide supplier error did not justify confiscation of the other goods, the Rs. 3,50,000 redemption fine, or the penalty under Section 112(a).

The importer was permitted to re-export the non-releasable amplifiers and other specified goods subject to the redemption fine of Rs. 2,00,000, pursuant to the customs authorities’ acceptance of the re-export request.

The order was modified accordingly, with consequential relief as permissible in law; the appeal was otherwise not allowed in full.