2017 (10) TMI 411 - AT - Customs

Imported Fabrics Classification Dispute: Fine & Penalty Reduced Due to Demurrage Charges

M/s. Maheswari Textiles Versus Commissioner of Customs, Chennai

Classification of goods dispute arose when imported fabrics did not match declared description, leading to a differential duty demand of Rs. 15,42,842. ... Mis-declaration of description of goods - import of 100% cotton woven fabrics stock lot - redemption fine - penalty - Held that: - Taking into account that the appellant has incurred huge demurrage charges, due to the time taken for investigation and also to get provisional release, the redemption fine and penalty imposed is excessive - Reducing the redemption fine to ₹ 1,50,000/- and penalty to ₹ 1,00,000/- would serve the ends of justice - decided partly in favor of appellant. Issues involved: Classification of goods, differential duty demand, redemption fine, penalty under section 112(a) of the Customs Act.Classification of goods and differential duty demand:The appellants imported a consignment of '100% cotton woven fabrics stock lot' from Srilanka. Upon investigation of a previous Bill of Entry, it was found that the fabrics did not match the declared description. Samples were sent for examination, leading to the determination of correct classification and a demand for a differential duty of Rs. 15,42,842. The appellant accepted the classification, paid the duty, and took provisional release of the goods. The original authority confirmed the classification, enhanced the value, and imposed a redemption fine of Rs. 4,15,000 along with a penalty under section 112(a) of the Customs Act. The appellant contested the redemption fine and penalty, seeking a reduction due to incurring demurrage charges during the delay in the investigation process.Redemption fine and penalty:The appellant, not contesting the classification or differential duty, focused on challenging the redemption fine and penalty. The appellant argued that the delay in allowing provisional release led to demurrage charges amounting to Rs. 10,73,061. The Tribunal considered this fact and found the redemption fine and penalty excessive. Consequently, the redemption fine was reduced to Rs. 1,50,000 and the penalty to Rs. 1,00,000 to align with the ends of justice. The impugned order was modified to reflect these adjustments without affecting the differential duty demand or other aspects of the original order.Conclusion:The Tribunal partially allowed the appeal by reducing the redemption fine and penalty, considering the appellant's incurred demurrage charges. The final order modified the impugned decision to lower the redemption fine to Rs. 1,50,000 and the penalty to Rs. 1,00,000, maintaining the differential duty demand and other orders intact.