2024 (11) TMI 748 - AT - Customs

Imported marbles and mosaics below minimum import prices violate DGFT notifications but confiscation penalties set aside after value enhancement agreement

CESTAT Chennai held that imported marbles and mosaics with CIF values below minimum import prices of US$ 60 and US$ 80 per SQM respectively violated DGFT ... Import of restricted goods under the Import Policy - Enhancement of the value equivalent to the Minimum Import Price notified by the DGFT - Imposition of redemption fine and penalty - import of Marbles and Mosaic involving CIF value less than US$ 60 per SQM and 80 per SQM respectively, in violation of the import policy - contravening conditions stipulated under DGFT Notifications No. 38(RE-2013) dated 26.08.2013 and 65 (RE-2010)/2009-2014 dated 04.08.2011, thereby rendering the imports liable for confiscation under Section 111(d) of the Customs Act,1962 read with Section3(3) of the Foreign Trade (Development and Regulations) Act,1992 (FTDR) and imposition of penalty under Section 112(a) HELD THAT:- The Minimum Import Prices of Marble and Mosaic have been fixed at US$ 60 and US$ 80 respectively in terms of above DGFT’s Notifications and the Appellant by importing these specified items at much below these prices have contravened the provisions of Foreign Trade (Development and Regulations) Act, 1992, thus, rendering these imported Marble and Mosaic as ‘restricted goods’ for import. Arguments of the Ld. Advocate that the policy condition imposed by the DGFT in exercise of powers under Section 5 of the Foreign Trade (Development and Regulations) Act, 1992 is not legal or valid and the Notification has not specified that the import value if less than the MSP are to be regarded as restricted are not acceptable. The Original Adjudicating Authority in his Order-in-Original has observed that the importer has agreed for enhancement of the value in line with the Minimum Import Price as fixed in terms of DGFT Notification No. 38 (RE-2013) dated 26.08.2013. We are of the view that once the value of the imported goods have been enhanced on the basis of Minimum Import Price fixed in terms of DGFT’s Notifications No. 65 (RE-2010)/2009-2014 New Delhi dated 04.08.2011 and No. 38 (RE-2013) dated 26.08.2013, we do not find any legal necessity to treat the imported goods having contravened the provisions of the Customs Act, 1962 read with Foreign Trade (Development and Regulations) Act, 1992. As such, the confiscation and penalties are not justified. The impugned Order-in-Appeal passed by Commissioner of Customs (Appeals), Chennai II is upheld to an extent of demand of duty at the enhanced value on the basis of Minimum Import Price fixed in the aforesaid Notifications, but, we order to set aside the confiscation and imposition of fine and penalty imposed. Thus, the appeal of the party is partly allowed on the above terms with consequential relief, if any, as per the law. Issues Involved:1. Whether the subject imports are to be treated as restricted goods under the Import Policy, thereby justifying confiscation and imposition of redemption fine and penalties under the Customs Act, 1962.2. Whether the enhancement of the value of imported goods based on the DGFT's Notification No. 38 (RE-2013) dated 26.08.2013 is legal or valid in accordance with the provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007.Issue-wise Detailed Analysis:1. Treatment of Subject Imports as Restricted Goods:The core issue was whether the imports of Marble and Mosaic, with CIF values below the stipulated US$ 60 and US$ 80 per square meter respectively, should be classified as restricted goods under the Import Policy, thus subjecting them to confiscation and penalties. The Department argued that by importing these items below the Minimum Import Prices (MIP) set by DGFT Notifications No. 65 (RE-2010)/2009-2014 and No. 38 (RE-2013), the appellant contravened the import policy, rendering the goods liable for confiscation under Section 111(d) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development and Regulations) Act, 1992. The Tribunal, however, concluded that once the value of the imported goods was enhanced to meet the MIP, there was no legal basis to treat the goods as having contravened the provisions of the Customs Act and FTDR Act, thus setting aside the confiscation and penalties.2. Legality of Value Enhancement Based on DGFT Notification:The appellant challenged the enhancement of the value of imported goods, arguing that the DGFT Notifications did not specify that imports below the MIP were restricted. The Tribunal examined the DGFT's authority under Section 3 of the FTDR Act to impose conditions on imports, including the setting of MIP. It was observed that the appellant had consented to the enhancement of value to the MIP, which was recorded in the Order-in-Original. The Tribunal noted that the appellant waived their rights to a show cause notice and personal hearing, thereby accepting the valuation. The Tribunal upheld the demand for duty at the enhanced value but ruled that the confiscation and penalties were unwarranted, as the enhanced value met the MIP requirements.Conclusion:The Tribunal upheld the enhanced valuation of the imported goods based on the MIP as per the DGFT Notifications but set aside the confiscation and imposition of fines and penalties. The appeal was partly allowed, with the Tribunal emphasizing that once the value was enhanced to the MIP, the imports did not contravene the Customs Act or FTDR Act provisions. The decision reflects a balance between adherence to import policy conditions and the procedural acceptance of valuation by the appellant.