JUDGMENT
C.N.B. NAIR, J.
1. The appellant M/s. Indian Potash Ltd., Chennai cleared about 12,000 MTs of imported Muriate of Potash under Bill of Entry No. 0807 dt. 4.4.2000. Assessment at a concessional rate of duty was obtained on the declaration that the imported goods were meant for use as manure or for production of complex fertilizers. However, a part of the imported goods (about 8500 MTs) were subsequently exported to Bangladesh. i.e. so much was not used as manure or for the production of complex fertilizers. Thus, that portion of the imported goods became ineligible for the concessional assessment. Under the Order impugned in the appeal, Commissioner of Customs has demanded a differential duty of about Rs. 3 crores and has imposed a penalty of Rs. 10 lakhs on the appellants. The appellants have contested only the penalty in the proceedings. The penalty has been imposed for violation of Section 111 (m) and (o) of the Customs Act, 1962. The Commissioner has reached a finding that the importer had mis-declared in the Bill of Entry that the imported goods were meant for use as manure with the malafide intention to evade customs duty chargeable on the goods under import. It is the contention of the appellants that they hadno malafide intention as alleged. They exported only about 25% of the goods imported. Further even before the customs clearance of the goods permission had been granted by the Govt. of India under letter dated 21st March 2003 for export to Bangladesh. It is also pointed out that upon receipt of the permission, the appellants had informed the Joint Commissioner Customs Visakhapatnam vide letter dated 28.3.2000 about the proposed export. They had also sought guidance on proposal to export 10,000 MTs of Muriate of Potash out of the import from the incoming shipments.
It was also pointed out that once the export is completed, necessary claims for duty drawbacj will be preferred on the Customs. It is the submission of the appellants that since they had informed the Customs Authorities about the proposal to export part of the imported goods prior to the assessment of the goods at concessional rate an allegation of making mis-declaration with the intent to evade duty is not maintainable. The learned Counsel has also pointed out that by paying import duty, albeit at the concessional rate, the appellant only stood to lose, in as much as they would have been entitled to import goods for re-export without any payment of duty by keeping the imported goods under bond, as advised in the letter dated 21st March 2000 of the Govt. of India. As against this, the contention of the Revenue is that exported goods were not eligible for concessional rate of duty and the appellants availed themselves of the concession only by making wrong declaration. It is also submitted that it is settled law that for attracting penalty under Section 112 (a) of the Customs Act, malafide is not required.
3. We find merit in the contentions raised by the appellants. Prior to the import itself, they had intimated the Customs authorities (letter dated 28.3.00) that part of the goods are going to be exported to Bangladesh. They had also the option of warehousing the imported goods without payment of any Customs Duty and then carry out the exports. It is hard to believe that an importer who had an option not to pay any customs duty at all, would make a mis-declaration and pay duty. In the present case, since Customs Authorities had been appraised of the intention to export part of the goods, it cannot be validly said that they were making a mis-declaration. When true facts are known to both the side, it is not open to one side to allege that the other side was making mis-declaration with intent to de-fraud the other. In any case, almost the entire differential duty now paid by the appellant is available as duty draw-back to the appellants.
4. In the light of what has been stated above, the appeal is allowed as prayed for, by setting aside the penalty imposed on the appellants.
