2004 (7) TMI 503 - AT - Customs

Tribunal Overturns Confiscation of VCM Due to Measurement Discrepancy

DCW LTD. Versus COMMISSIONER OF CUSTOMS, TRICHY

DCW LTD. Versus COMMISSIONER OF CUSTOMS, TRICHY - 2004 (176) E.L.T. 113 (Tri. - Chennai) Issues:- Confiscation of excess stock of Vinyl Chloride Monomer (VCM) under Section 111(l) of the Customs Act- Imposition of penalty under Section 112(b) of the ActConfiscation of Excess Stock of VCM:The appeal challenged an order confiscating 37.691 MTs of VCM under Section 111(l) of the Customs Act, with an option for redemption against payment of a fine. The appellants, manufacturers of Polyvinyl Chloride resin, imported VCM for their production process. The excess stock was discovered during a measurement discrepancy between the stock recorded by the appellants and the measurement by Customs officers. The Commissioner of Customs based the confiscation on the excess stock found, leading to the appeal.The appellants argued that the storage tanks' total capacity was 5000 MTs and the excess stock was only 0.6%, questioning the reliability of the dip reading method used for measurement. They contended that any excess stock would be cleared upon payment of duty, minimizing revenue loss. The appellants cited a previous tribunal decision to support their argument regarding the accuracy of the dip reading method for volatile chemicals like VCM. They emphasized that a negligible stock difference should not warrant confiscation and penalty.In response, the SDR highlighted that the appellants had previously experienced excesses of VCM compared to declared quantities in Bills of Entry, making them liable for confiscation and penalty. The SDR argued that the appellants could not dispute the dip reading method's reliability as they had used it themselves and referred to a tribunal decision approving dip measurement for imported crude oil assessment.Upon review, the Tribunal noted the discrepancy in VCM stock measurements but found that the show cause notice did not reference any specific Bill of Entry or declare the excess stock in relation to a specific entry. As per Section 111(l) of the Customs Act, confiscation is applicable when goods exceed those declared in the entry. Since no Bill of Entry was mentioned, the confiscation under Section 111(l) was deemed unsustainable. Consequently, the penalty was also deemed unsustainable. The Tribunal set aside the impugned order and allowed the appeal solely based on this legal ground.This detailed analysis of the judgment highlights the legal arguments, factual background, and the Tribunal's reasoning in overturning the confiscation and penalty imposed on the appellants.