Minor mismatch due to adoption of standard method, not a mis-declaration

The CESTAT, Ahmedabad ruled that a slight difference in the weight of goods, arising from the use of a standard theoretical method, does not constitute a mis-declaration by the assessee. This is especially true when the differential customs duty has been paid. The tribunal set aside an order that had confiscated goods and levied penalties based on a perceived mis-declaration, recognising the appellant's actions were not intended to evade duty.

The CESTAT, Ahmedabad in Kalpataru Transmission Ltd. v. C.C. Mundra [Customs Appeal No. 10674/2015-SM dated July 28, 2023] held that in case of slight variation in weight due to adoption of standard theoretical method and after payment of differential customs duty, there remains no mis-declaration on part of assessee.

Facts

M/s Kalpataru Transmission Ltd. ("the Appellant") filed bill of entry for clearance of goods mentioning weights based on standard theoretical weight basis. On examination by Customs (Docks Examination) the actual weight of the goods turned out to be more than mentioned by the Appellant in bill of entry.

The Adjudicating Authority vide an order ("the Impugned Order") citing mis-declaration by the Appellant confiscated the goods under section 111(m) of the Customs Act, 1962 ("the Customs Act") along with levy of penalty under section 112(a) of the Customs Act.  

On rejection of appeal against the Impugned Order by the Commissioner (Appeal), the Appellant filed an appeal before the CESTAT, Ahmedabad.

Issue

Whether a minor mismatch due to adoption of standard theoretical method constitutes mis-declaration on part of the assessee? 

Held

The CESTAT, Ahmedabad in Customs Appeal No. 10674/2015-SM held as under: -

• Noted that, the mismatch on part of the Appellant was due to the adoption of standard theoretical weight method. However, later the differential amount of customs duty was paid by the Appellant. 
• Observed that, based on these facts the Appellant’s actions do not constitute mis-declaration to evade customs duty.
• Set aside the Impugned Order.

Our Comments:

A praiseworthy judgement by CESTAT, Ahmedabad giving due consideration to bonafide belief followed by corrective actions by the Appellant. It implies that minor differences without any malafide intention do not warrant imposition of strict excessive actions by the Revenue Authority.