2019 (1) TMI 518 - AT - Customs

Tribunal upholds duty demand and penalties on company for goods reclassification, sets aside penalties on Managing Director.

Pooja Hardware Pvt. Ltd., Divyesh M. Shah Versus Commissioner of Customs (Nhava Sheva-III), Mumbai

The Tribunal upheld the duty demand confirmation and penalties imposed on the appellant company due to the reclassification of imported goods under CTH ... Classification of imported goods - aluminium profiles - whether merit classification under CTH 76042990 or under CTH 83021090 of CTA, 1975? - Held that:- The learned adjudicating authority by referring to the signed catalogue of “Aluminium Profiles” furnished by the appellant, has recorded specific findings in para 12 at pages 9, 10 and 11 in the impugned order to support the stand of classification of subject goods under CTH 830219090. The appellants have not adduced any material evidence to counter such claim by Revenue - Further, the voluntary statement recorded under summon was never retracted by the appellant at any point of time before adjudication of the matter. Thus, it cannot be said that the product in question should be classifiable under CTH 76042990, instead of CTH 83021090 of CTA, 1975 - demand not sustainable. Penalty u/s 112(a) of CA - Held that:- Initially, classification of the disputed goods was highly contentious and there were different views within the department, whether to classify the same under Chapter Heading 7604 or 8302 of the CTA, 1975. Thus, under such circumstances, the provisions of Section 112(a) of the Act cannot be invoked for imposition of penalty on the appellant No.2, who is the Managing Director of the appellant company - penalty set aside. Appeal disposed off. Issues: Classification of imported goods under CTH 76042990 or CTH 83021090; Imposition of penalties under Section 112(a) of the Customs Act, 1962Classification Issue:The case involved an appeal against the order passed by the Commissioner of Customs regarding the classification of imported goods by M/s. Pooja Hardware Pvt. Ltd. The appellant contended that the aluminium profiles should be classified under CTH 76042990, while the department reclassified them under CTH 83021090 of the Customs Tariff Act, 1975. The impugned order confirmed duty demand and imposed penalties based on this reclassification. The Tribunal analyzed the statement of the Managing Director of the appellant company, which indicated that the imported goods were intended for specific use in furniture fittings. The Tribunal noted that the appellant failed to provide evidence countering the Revenue's claim for reclassification. The voluntary statement was not retracted before adjudication, leading the Tribunal to conclude that the goods should be classified under CTH 83021090. Consequently, the confirmed duty demands on the appellant company were deemed sustainable under the law.Penalty Imposition Issue:Initially, there was a dispute within the department regarding the classification of the disputed goods under Chapter Heading 7604 or 8302 of the Customs Tariff Act, 1975. Given the contentious nature of the classification, the Tribunal determined that penalties under Section 112(a) of the Customs Act, 1962 could not be imposed on the Managing Director of the appellant company. Therefore, the Tribunal held that the penalties imposed on the Managing Director were not justifiable under judicial scrutiny. Consequently, the imposition of penalties on the Managing Director was set aside, and the appeal was allowed in his favor.In conclusion, the Tribunal dismissed the appeal by the appellant company against the duty demand confirmation and penalties imposed. However, the appeal was allowed in favor of the Managing Director regarding the penalties imposed on him. The impugned order was upheld in part and set aside in part based on the classification issue and penalty imposition issue, respectively.