2018 (5) TMI 1370 - AT - Customs

Tribunal rules in favor of importer in mis-declaration case, penalties reduced

The Tribunal, in the case involving mis-declaration of imported goods as scrap and the applicability of exemption notification, ruled in favor of the ... High Seas Sale - mis-declaration of imported goods - Heavy Melting Scrap - confiscation - penalty - Whether in the facts and circumstances of the case, the goods which were purchased on high sea sale basis and were declared as heavy melting scrap in the documents of high seal seller, are not mis-declared and hence not liable to confiscation and no penalty is imposable, as held by Member (J)? - Difference of opinion - majority order. Held that: - Tribunal in the case of Kuber Casting Pvt.Ltd. [2016 (2) TMI 981 - CESTAT CHANDIGARH], in similar circumstances, has held that if the goods booked for importation are heavy melting scrap and on receipt of goods, it is found that the some quantity of rerollable scrap is received then it does not amount to misdeclaration - confiscation and penalty not warranted. In view of the majority order, all the three impugned orders are set aside and all the three appeals are allowed. Issues Involved:- Mis-declaration of imported goods as scrap- Applicability of exemption notification- Confiscation of goods containing re-rollable material- Imposition of penalty and redemption fine- Difference of opinion between Members on mis-declaration and confiscationIssue 1: Mis-declaration of imported goods as scrapThe appellant imported Heavy Melting Scrap but the consignment also contained re-rollable materials. The adjudicating authority held that since re-rollable material was imported along with scrap, the exemption notification did not apply. The appellant argued that the re-rollable materials were not of prime quality and should be considered as scrap only. The Tribunal noted that all documents described the goods as Heavy Melting scrap, and the appellant procured the consignments based on this description. Therefore, imposing penalties for mis-declaration was deemed unjustified.Issue 2: Applicability of exemption notificationThe Commissioner (Appeals) rejected the appellant's contention that re-rollable materials should be exempted under a specific notification. However, the Tribunal found that since all documents indicated the consignment as Heavy Melting scrap, the presence of re-rollable material did not change the nature of the goods. Citing a previous Tribunal decision, the confiscation of goods was deemed unnecessary, and the impugned orders were set aside, allowing all three appeals.Issue 3: Confiscation of goods containing re-rollable materialThe Tribunal analyzed the discrepancy between declared and actual quantities of Heavy Melting Scrap and re-rollable steel in the consignments. It was found that in two cases, the re-rollable scrap exceeded the declared amount of scrap. The Tribunal held that mis-declaration occurred as the goods were found to contain a significant percentage of re-rollable steel not declared in the bill of entry, justifying confiscation under the Customs Act. The redemption fine was reduced, and penalties were imposed on the importer.Issue 4: Imposition of penalty and redemption fineThe Tribunal reduced the redemption fine and penalties imposed on the importer due to mis-declaration of goods. While the goods were held liable for confiscation, the quantum of penalties was deemed excessive and hence reduced in each appeal. The Tribunal referred to precedents and legal provisions to support its decision on the imposition of penalties and fines.Issue 5: Difference of opinion between Members on mis-declaration and confiscationA difference of opinion arose between the Members regarding whether the goods were mis-declared and liable for confiscation. One Member held that the goods were not mis-declared based on the nature of the import and previous Tribunal decisions. The matter was referred to the Hon'ble President for the appointment of a Third Member to resolve the conflicting views.This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHANDIGARH (LB) highlights the key legal issues, arguments presented, and the Tribunal's decisions on mis-declaration, exemption notifications, confiscation of goods, penalties, and the difference of opinion among the Members.