Revenue fails to prove suction pump mis-declaration, excess fabric duty confirmed under section 17

The CESTAT NEW DELHI upheld duty demand on excess quantity of non-textured fabric but set aside confiscation and redemption fine. The tribunal found the Revenue failed to prove suction pumps were mis-declared regarding capacity, accepting appellant's transaction value. The case involved re-assessment under section 17 rather than section 28, making sections 28AA and 114A inapplicable. Since only violation was excess quantity import on one item, confiscation was deemed unwarranted. Appeal was allowed in part with duty confirmation on excess fabric quantity maintained.

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Issues Involved:
1. Excess quantity of non-textured fabric found.
2. Capacity and valuation of suction pumps.
3. Assessment and confirmation of duty under section 28(4).
4. Confiscation and redemption of goods.
5. Imposition of penalty under Section 114A.

Detailed Analysis:

1. Excess Quantity of Non-Textured Fabric Found:
The appellant filed Bill of Entry No. 7301366 on 02.11.2016 to clear imported goods, including non-textured fabrics. Upon examination, officers found an excess quantity of 1629 square meters of non-textured fabric. The appellant agreed to the excess quantity and paid the duty on it. The appellant does not dispute the duty paid on this excess quantity even before the Tribunal. Therefore, the confirmation of demand of duty on the excess quantity of non-textured fabric was upheld.

2. Capacity and Valuation of Suction Pumps:
The appellant declared the suction pumps as 75 Gallons Per Day (GPD) capacity. However, the department disputed this declaration, asserting the pumps were of 100 GPD capacity. The burden of proof lies with the department to establish that the pumps were mis-declared. The department produced a certificate from a Chartered Engineer, who opined that the pumps "seem to be suitable for 100 GPD capacity." However, the Chartered Engineer did not conclusively determine the capacity, nor did he provide a formula or tests conducted to ascertain the capacity. In the absence of definitive evidence, the Tribunal accepted the appellant's declaration that the pumps were of 75 GPD capacity and imported at the prices indicated in the invoices. Consequently, the transaction value of the pumps declared in the Bill of Entry should have been accepted.

3. Assessment and Confirmation of Duty under Section 28(4):
The appellant argued that the duty could not have been confirmed under section 28(4) because the process of assessment was not completed. The Tribunal accepted this submission, noting that the proper officer must pass a Speaking Order within 15 days if the importer does not agree to the re-assessed duty. The Tribunal further explained that once the proper officer makes an order permitting clearance of goods for home consumption under section 47, the goods cease to be imported goods and dutiable goods, and the importer ceases to be an importer. Therefore, there can be no assessment of duty after this point, and any modifications to the assessment must be done through appeal or the process under section 28. In this case, the Additional Commissioner of Customs (Preventive) reassessed the duty instead of allowing the proper officer to do it, making it a reassessment under section 17 rather than a demand under section 28. Consequently, sections 28AA and 114A, which are linked to section 28, do not apply.

4. Confiscation and Redemption of Goods:
The goods were confiscated under section 111(l) and (m) and allowed to be redeemed on payment of a redemption fine. The Tribunal noted that section 111 makes certain goods liable for confiscation but does not mandate it. The adjudicating authority must exercise discretion to determine if confiscation is necessary. Since the only violation was the import of excess quantity of one of the goods, the Tribunal found no sufficient ground for confiscation. Therefore, the confiscation of the goods and the redemption fine were set aside.

5. Imposition of Penalty under Section 114A:
A penalty of Rs. 4,57,868/- was imposed on the appellant under section 114A. However, since the Tribunal found that the reassessment was under section 17 and not section 28, section 114A, which is linked to section 28, does not apply. Therefore, the penalty under section 114A was also set aside.

Conclusion:
The Tribunal partly allowed the appeal, upholding the confirmation of demand of duty on the excess quantity of non-textured fabric but setting aside the rest of the order, including the reassessment of suction pumps, confiscation of goods, redemption fine, and penalty under section 114A.

[Order pronounced in the open court on 23.08.2024]

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