2011 (6) TMI 562 - AT - Customs

Tribunal overturns confiscation, penalties in favor of appellants due to technical misdeclaration

The Tribunal ruled in favor of the appellants, setting aside the confiscation of goods, penalties, and truck. They found the misdeclaration to be ... Confiscation and imposition of penalty - appellants is a SEZ unit located in KASEZ, Gandhidham. They have been issue with a letter of permission by the Development Commissioner, KASEZ, for manufacture and reconditioning of electronic items like Computer Monitors/Printers, etc. Reconditioning of Computer Monitors was being carried out by the appellants in accordance with the said letter of permission – Held that:- DGFT Policy Circular No. 29, classifies reconditioned computer monitors as falling under Heading 8471 60. entry allows free import of the goods and there is no restrictions placed thereunder for import of such goods. no justification for confiscation of the seized goods or truck and for imposition of penalties either of the appellants. confiscation of the goods set aside as that of the truck and set aside the penalties imposed on both the appellants. both the appeals are allowed Issues:1. Misdeclaration of goods and violation of import policy.2. Confiscation of goods and imposition of penalties.Analysis:Issue 1: Misdeclaration of goods and violation of import policyThe case involved the appellant, a unit in Kandla Special Economic Zone (KASEZ), importing second-hand computer monitors to a DTA unit. The Revenue alleged misdeclaration of goods as reconditioned parts and accessories instead of computer monitors, leading to a violation of import policy. The show cause notice proposed confiscation of goods and penalties under relevant sections of the Customs Act. The Commissioner passed an order confiscating the goods and imposing penalties on the appellants. The appellant argued that they were allowed by the Development Commissioner, KASEZ, to import second-hand computers without restrictions. They contended that the items were not prohibited and cited Customs Tariff Heading 8471 60 as freely importable. The appellant also highlighted a DGFT Policy Circular classifying reconditioned computer monitors under the same heading, emphasizing no policy restrictions on the import of such goods.Issue 2: Confiscation of goods and imposition of penaltiesThe Revenue referred to Para 2.17 of the Foreign Trade Policy, 2004-09, restricting the import of second-hand goods unless in accordance with specific provisions or permissions. The Revenue argued for confiscation based on misdeclaration admitted by the appellants. However, the Tribunal noted that the appellants operated within the permissions granted by the Development Commissioner and that Para 2.17 allows imports with issued permissions. The Tribunal agreed with the appellants that the misdeclaration was technical and procedural, with no revenue implications. Therefore, they set aside the confiscation of goods, penalties on the appellants, and the truck owned by them, concluding that the appellants did not benefit from the misdeclaration. The appeals were allowed, providing consequential relief to the appellants.In summary, the Tribunal ruled in favor of the appellants, finding no justification for the confiscation of goods, penalties, or truck based on the technical misdeclaration issue and the compliance with permissions granted by the Development Commissioner. The judgment highlighted the importance of adherence to import policies and accurate declaration of goods to avoid unnecessary penalties and confiscations.