2017 (6) TMI 613 - AT - Customs

Tribunal modifies decision on goods liability in stainless steel diversion case.

CC (Seaport - Export), Chennai Versus M/s. Chennai Hi-Tech Home Appliances (P) Ltd.

The Tribunal allowed the appeal partially, modifying the decision to hold goods found at a separate location liable for confiscation in a case involving ... Diversion of imported goods - violation of condition of import - the respondent had diverted 8816.134 MTs of imported stainless steel plates/coils in the local market - confiscation - Held that: - we are unable to fathom why the goods imported by the respondent availing duty exemption thereon, on the condition of using them in manufacture and export of stainless steel vessels, should be found in any other place other than the manufacturing premises - there is substance in the allegation raised in the SCN that the M/s. Massey Godown was used only as a intermediate place for the purpose of diversion and sale of the goods - 627.192 MTs of imported stainless steel sheets/coils seized at M/s.Massey Godown are very much liable for confiscation u/s 111(o) of the CA, 1962 - for the limited purpose of considering the quantum of redemption fine under Section 125 ibid, the matter is being remanded to the adjudicating authority. Appeal allowed by way of remand. Issues:1. Alleged diversion of imported stainless steel sheets/coils in the local market.2. Denial of customs duty exemption and demand of differential customs duty.3. Confiscation of allegedly diverted goods and goods found at a separate location.4. Imposition of penalties on the importer and other individuals.5. Confiscation of goods seized at a separate location.6. Non-representation of the respondent during the appeal process.Analysis:1. The case involved the alleged diversion of imported stainless steel sheets/coils in the local market by the respondent importers. The Directorate of Revenue Intelligence (DRI) conducted investigations based on intelligence regarding the diversion. The investigations revealed discrepancies in the usage of the imported material, with a significant quantity unaccounted for and found at a location not owned by the respondent. The respondent was accused of diverting a substantial amount of imported goods, leading to the issuance of a Show Cause Notice (SCN) proposing various penalties and confiscations.2. The adjudicating authority confirmed the demand for differential customs duty, confiscated the allegedly diverted goods, and imposed penalties on the importer and the Managing Director. However, the authority did not hold certain goods found at a separate location liable for confiscation. The Department appealed the decision, arguing for the confiscation of all diverted goods and imposition of penalties on other involved parties.3. During the appeal hearing, the Department reiterated the grounds for appeal, emphasizing the evidence of diversion against the respondent. The Department contended that the goods found at the separate location were part of the duty-free consignment imported by the respondent and should be confiscated. The absence of penalties on other noticees involved in the diversion was also highlighted as a point of contention.4. The Tribunal noted the non-representation of the respondent during the appeal process and proceeded to decide the matter on its merits due to the appeal's age. The Tribunal agreed with the Department's contention regarding the non-confiscation of goods found at the separate location, stating that those goods should be liable for confiscation under the Customs Act. The Tribunal set aside the previous decision and remanded the matter to the adjudicating authority for further consideration of redemption fine.5. The Tribunal addressed the Department's plea for imposing penalties on other noticees but found that those noticees were not parties to the proceedings, and no separate appeals were filed against them. Therefore, the plea for penalties on the remaining noticees was not considered, and the impugned order was modified only regarding the confiscation of goods found at the separate location.6. Ultimately, the appeal was partly allowed, with the decision being modified to hold the goods found at the separate location liable for confiscation, and the matter was remanded for further proceedings related to the redemption fine.