Declared Goods Used To Conceal Undeclared Imports Can Be Confiscated: CESTAT Allahabad

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad, has ruled that declared goods can also be confiscated when they are used to conceal large quantities of undeclared goods.

“It is not in dispute that the goods imported by the appellant was accompanied and used for concealment of large quantities of undeclared goods sought to be smuggled in to India by violating the provisions of Trade Markets and Intellectual Property Laws,” Technical Member Sanjiv Srivastava observed.

He held that the declared garments were therefore liable to confiscation under Sections 118 and 119 of the Customs Act.

The ruling came in an appeal by Ashtvinayak and Company against confiscation of imported garments and the redemption fine and penalty imposed on the importer.

The importer had brought 32 packages of garments from Guangzhou, China, under a Bill of Entry dated August 30, 2019. The goods were declared at ₹5,51,179, and customs duty of ₹1,95,556 was paid.

During an initial examination on September 2, Customs found that the goods did not match the declaration. A 100% examination was then conducted on September 9.

The detailed examination found that the consignment contained undeclared goods, including branded garments concealed among the declared garments. The brands included Adidas, Nike, Louis Vuitton, Burberry, Gucci, Under Armour, Armani, Diesel DNA, GAP and Hugo Boss.

The proprietor, Gaurav Shukla, maintained that he had ordered only unbranded garments. He claimed that the branded goods might have been supplied because of a packing mistake by the foreign supplier.

He had stated that orders were placed through email, but could not produce the email through which the order was allegedly sent.

The adjudicating authority ordered absolute confiscation of the undeclared branded goods. It also ordered confiscation of the declared garments valued at ₹5,58,126 under Section 118. Those garments were allowed to be redeemed on payment of ₹85,000 and applicable customs duty. A ₹4 lakh penalty was imposed on the importer under Section 112(a) and (b).

Section 118 covers packages or their contents used to conceal goods liable to confiscation. Section 119 also permits confiscation of goods used to conceal smuggled goods. In this case, the tribunal found that the declared garments had been used to conceal the undeclared goods and upheld their confiscation under these provisions.

Before the tribunal, the importer did not challenge confiscation of the branded goods or claim title over them. His challenge was limited to the redemption fine and penalty. He also maintained that he had not knowingly ordered the branded goods and that they could have been sent by mistake.

The tribunal did not accept the explanation regarding the supplier's mistake. It noted that the importer had not produced the email allegedly used to place the order and found that there was no evidence establishing his bona fides.

On the redemption fine, however, the tribunal took a different view. It found the ₹85,000 fine excessive when compared with the value of the declared garments. The fine was therefore reduced to ₹55,812, representing 10% of their declared/assessed value.

The tribunal also reduced the ₹4 lakh penalty to ₹2 lakh, holding that the original amount was excessive. With these modifications, it upheld the impugned order and partly allowed the appeal..

For Appellant: Advocate Anuj Agarwal, 

For Respondent: Abhishek Mukharjee, Authorised Representative