2019 (9) TMI 397 - HC - Customs

Tribunal Upholds Customs Act Penalty in Alloy vs. Non-Alloy Steel Case

M/s. Leo Fasteners (Presently known as Grace Infrastructure Pvt. Ltd.) Unit II Versus The Commissioner of Customs (Import)

The appeal filed by M/s.Leo Fasteners against the penalty and redemption fine imposed under Section 112(a) of the Customs Act, 1962 was dismissed by the ... Imposition of penalty u/s 112(a) of the Customs Act, 1962 - redemption fine - classification of imported goods - import of Non Alloy material - Alleged mis- declaration of imported goods - whether the goods imported fell within Alloy Steel as per IS 7598:1900? - maintainability of appeal - appropriate forum - HELD THAT:- No question of law arises under Section 130 of the Act for consideration by this court - the Assessee ought to have approached the Departmental Authorities for waiver of the penalty and in such circumstances, in view of a very low and marginal difference of the chemical material (Boron) content in the goods imported and that too is one of several components and that other parameters as given in the Laboratory Report being within limit is not disputed by the learned counsel for the parties, would bring the commodity in question under 'Non Alloy Steel' and the Authority concerned should have taken a liberal view of the matter regarding the imposition of penalty and redemption fine in question imposable on the goods. Therefore, with the liberty to the Assessee to approach the competent Authority concerned for waiver of fine and penalty, we dispose of the present Appeal. Issues: Appeal against imposition of penalty and redemption fine under Section 112(a) of the Customs Act, 1962.Analysis:1. The Assessee, M/s.Leo Fasteners, filed an appeal challenging the penalty and redemption fine imposed under Section 112(a) of the Customs Act, 1962. The Tribunal dismissed the appeal, upholding the imposition of penalty and fine.2. The Tribunal's decision was based on the National Metallurgical Laboratory (NML) report, which confirmed the misdeclaration of goods imported by the Assessee. The goods were tested by NML, and the report indicated a discrepancy in the chemical composition, specifically higher Boron content, classifying the goods as Alloy Steel instead of Non-Alloy Steel as declared.3. The Tribunal held that once misdeclaration is established, the appellant loses the right to challenge the valuation further. Consequently, the valuation adopted by Revenue remained unchallenged, and duty was levied accordingly.4. The Tribunal found the redemption fine of &8377; 5,75,000 to be reasonable and proportionate considering the value of the goods for which duty was levied. Therefore, the redemption fine was upheld along with the penalty imposed due to the misdeclaration.5. The Assessee argued that there was no mens rea involved in the misdeclaration and that the Boron content discrepancy was marginal. The court suggested that the Assessee should have approached the Departmental Authorities for waiver of the penalty, considering the minor difference in Boron content and other parameters within limits, classifying the goods as 'Non Alloy Steel.'6. Ultimately, the court disposed of the appeal, granting the Assessee liberty to seek waiver of the penalty and redemption fine from the competent Authority. No costs were awarded in the case, and the connected Miscellaneous Petition was closed.