2008 (5) TMI 596 - AT - Customs

Appeal granted: Importer's penalty overturned due to misclassification error

VICTORY TRANSFORMERS & SWITCHGEARS LTD. Versus CCE., HYDERABAD

The Tribunal allowed the appeal, setting aside the order for confiscation and penalty imposed on the appellant for importing 'Secondary CRGO Electrical ... EXIM - Secondary CRGO Electrical Coils Issues:1. Violation of Foreign Trade Policy for importing goods at Hyderabad Port.2. Confiscation of goods under Section 111(d) of the Customs Act, 1962.3. Penalty imposed under Section 112(a) of the Act.4. Request for diversion of consignment to another port denied by the Commissioner.5. Classification of goods as 'coils' instead of prohibited 'sheets' for import at Hyderabad Port.Analysis:1. The appeal stemmed from the issue of the appellant importing 'Secondary CRGO Electrical Coils' at Hyderabad Port, leading to allegations of violating the Foreign Trade Policy. The Revenue confiscated the goods under Section 111(d) of the Customs Act, 1962, and imposed a penalty of Rs. 1,00,000 under Section 112(a) of the Act. The appellants contended that the goods reaching Hyderabad Port was due to an inadvertent mistake, and they had requested the Commissioner to redirect the consignment to the appropriate port, which was declined. It was argued that the Department could not proceed with confiscation after rejecting their plea.2. The second issue revolved around the classification of the imported item as 'coils' instead of the prohibited 'sheets' for import at Hyderabad Port. The appellant presented the ITC (HS) Classifications of Export & Import items to demonstrate that 'Secondary CRGO Sheets' were prohibited, not 'coils'. The Tribunal observed that as per the Import Licence Notes, only 'Electrical Sheets (CRGO)' were prohibited for import through Hyderabad Port. The Commissioner's error in treating 'Electrical Coils' as 'Electrical Sheets' rendered the impugned order legally flawed. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief.3. During the hearing, the learned SDR reiterated the Commissioner's findings, which were based on the mistaken classification of the imported goods. However, upon reviewing the ITC (HS) Classification of Export & Import of Items - Vol. 3, the Tribunal concluded that 'Electrical Coils' did not fall within the prohibited category of 'Electrical Sheets'. Therefore, the Tribunal deemed the impugned order as improper and not in accordance with the law, leading to its reversal and the allowance of the appeal with any necessary consequential relief.In conclusion, the Tribunal's judgment centered on the misclassification of the imported goods and the procedural errors in confiscating the goods based on the incorrect interpretation of the Foreign Trade Policy. The decision highlighted the importance of accurate classification and adherence to import regulations to avoid unjust confiscations and penalties.