2012 (4) TMI 390 - AT - Customs

Tribunal confirms penalties for misdeclared imported goods, reduces fines due to potential dual use

The Tribunal upheld the confiscation of goods and penalties imposed by the lower authorities as the imported goods, initially declared as M.S. Seamless ... Import of goods declared as M.S. Seamless pipes - Department found the goods were of used nature – confiscation of goods and imposed a redemption fine and penalty – Held that: - The inspection done in front of independent panchas witnesses, and 11 photographs of imported goods depicts the consignment of pipes of used nature - the appellant has not produced any evidence to come to a conclusion that the pipes imported by him are sold as capital goods – redemption fine imposed by adjudicating authority is reduced from Rs.1,20,000/- to Rs.75,000/- (Rupees Seventy Five Thousands only) and penalty is reduced from Rs.60,000/- to Rs.30,000/-against assessee. Issues:Import of goods declared as M.S. Seamless pipes, but found to be used goods. Confiscation of goods under Foreign Trade Policy. Appeal against Order-in-Original confiscating goods and imposing penalties. Determination of goods as capital goods. Reduction in redemption fine and penalty.Analysis:The appeal was directed against the Order-in-Original confiscating goods and imposing penalties due to the import of goods declared as M.S. Seamless pipes, which were later discovered to be used goods, not falling under the declared category. The lower authorities considered the goods restricted under Para 2.7 of Foreign Trade Policy 2004-2009. The appellant, in response, submitted a certificate from a Chartered Engineer claiming the goods were second-hand. The first appellate authority upheld the confiscation and imposed a redemption fine and penalty under the Customs Act, 1962.The appellant argued that the pipes, although second-hand, could be considered capital goods exempt from restrictions if they were used as capital goods. The definition of capital goods under Para 9.12 was invoked, asserting that the pipes qualified as capital goods under CENVAT Credit Rules, 2004. However, the evidence presented was deemed insufficient by the authorities, with doubts raised regarding the clarity and independence of the Chartered Engineer's certificate.Upon review, the Tribunal found that the lower authorities had correctly relied on the evidence, including photographs taken in the presence of independent witnesses, to determine the nature of the imported goods. Despite the appellant's contentions, no conclusive evidence was presented to establish the imported pipes as capital goods falling within the defined category under Para 9.12. Consequently, the Tribunal upheld the lower authorities' decision, concluding that the goods were not capital goods as claimed by the appellant.Acknowledging the potential dual use of the imported consignment, the Tribunal granted a reduction in the redemption fine and penalty imposed. The redemption fine was reduced from Rs.1,20,000 to Rs.75,000, and the penalty was reduced from Rs.60,000 to Rs.30,000. Ultimately, the appeal was rejected, with modifications made to the fines and penalties as indicated.In summary, the Tribunal affirmed the confiscation of the goods and penalties imposed by the lower authorities, as the appellant failed to provide sufficient evidence to prove the imported goods as capital goods exempt from restrictions. However, a reduction in the redemption fine and penalty was granted considering the potential dual use of the goods.