2025 (9) TMI 1284 - AT - Customs

Appeal allowed: Confiscation and penalty set aside as most imports time-barred and no proved suppression or misdeclaration

M/s. Olympic Enterprises and Shri Vivek Kumar Jain Versus Commissioner of Customs (Exports), Chennai

CESTAT Chennai allowed the appeal, setting aside orders of confiscation and penalty. It held imports (Sept 2009-Aug 2010) were largely time-barred except ... Invocation of extended period of limitation - evasion of anti dumping duty - mis-declaration of fibre glass measuring tapes as tailor tapes - failure to declare the brand names - violation of the provisions of the SWMA, 1976 rendering the goods liable for confiscation under Section 111(m) and 111(d) of the Customs Act, 1962 - levy of penalty u/s 112(a) of Customs Act - HELD THAT:- The imports have taken place from September 2009 to August 2010 and the show cause notice was issued in July 2011. It is not in dispute that the subject period was prior to the introduction of self-assessment and at the time of import, the goods were cleared on examination and assessment by the proper officer. The appellant’s contention that the proper officer had granted such clearance only after the goods were examined and that they were assessed at a value enhanced as found appropriate by the said officer, also remain uncontroverted. Thus, save for the imports made vide bill of entry No.600974 dated 18.08.2010, the imports made vide the earlier three bills of entry, are in any event beyond the normal period of limitation and thus barred by limitation. There are merit in the contention of the appellant that when the description, and quantity at the time of importation based on the commercial invoices received by them from their overseas suppliers were declared and the consignments were cleared after duly scrutinizing the supporting documents and the assessing officers had also enhanced the value at the time of assessment and clearance of these goods, after having regard to contemporaneous imports prevailing during the relevant period, the allegation of suppression or misdeclaration against the appellant cannot sustain. It cannot be the case of the Department that the proper officers who had examined the goods are unaware that fiberglass measuring tapes attract antidumping duty. When the dispute is one of classification, once the assessee had declared the description of the goods imported correctly as per the supporting documents, it was the duty of the assessing officer to correctly assess the goods. It cannot be gainsaid that classification of the goods, along with valuation and import policy, are crucial aspects of assessment which the proper officer is entrusted with - The appellants’ contentions on the nature of the goods as known in trade and materials relied on to substantiate their contentions that their competitor also sold the impugned goods as tailor tapes also remain uncontroverted by the appellate authority. In such circumstances, post such clearance of imported goods, any statement taken from the second appellant to the contrary, and which is admittedly retracted and the voluntariness of which remains contested, cannot be relied upon to substantiate misdeclaration. It is found that in shanti Rayons case [2025 (6) TMI 614 - CESTAT CHENNAI], it was found that there was an admitted suppression by the appellant therein whereas the second appellant in the instant case has in the statement stated that the declaration in the bills of entry were as per the declaration in the invoices of the supplier. In Madanlal Steel Industries case [1991 (8) TMI 86 - HIGH COURT OF JUDICATURE AT MADRAS] the importer had moved the court prematurely. Thus, the case laws relied upon by the Ld. A.R. are distinguishable as they were delivered in different factual matrices not comparable with these matters. The impugned orders in appeal cannot sustain and are liable to be set aside - Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the demand of anti-dumping duty by invoking the extended period of limitation (proviso to Section 28(1) of the Customs Act read with Section 9A of the Customs Tariff Act) was valid where imports were cleared after assessment by the proper officer in the pre-self-assessment era. 2. Whether the importer deliberately suppressed or misdeclared the nature/description of imported measuring tapes to evade anti-dumping duty, where invoices, packaging and trade practice described the goods as 'tailor tapes' and the assessing officer examined and cleared the consignments. 3. Whether post-clearance retracted statements of the importer can support a finding of suppression or misdeclaration sufficient to (a) invoke extended limitation, (b) impose anti-dumping duty and interest, and (c) impose penalties under Sections 112(a) and 114A and order confiscation under Sections 111(d)/(m) with a redemption fine. 4. Whether confiscation and imposition of a redemption fine are maintainable where goods (or part thereof) are not available for seizure and were earlier cleared after assessment, and where the adjudicating authority's valuation and the market value relied upon are divergent. 5. Whether classification disputes arising on the face of declared description and supporting documents can be treated as suppression permitting extended limitation and penal consequences, or whether such matters fall within the assessing officer's remit at import clearance. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of invoking extended period of limitation where imports were examined and assessed pre-self-assessment Legal framework: Proviso to Section 28(1) of the Customs Act permits invocation of the extended period of limitation where there is suppression of facts or wilful mis-statement; in pre-self-assessment era, imports cleared after examination and assessment by the proper officer carry assessments made by competent authority. Precedent treatment: The adjudicatory practice supports that extended limitation requires substantive evidence of suppression or fraud beyond classification disputes; cases where proper officers examined goods and cleared them have been treated as limiting Revenue's ability to invoke extended limitation absent proof of collusion or concealment. Interpretation and reasoning: The Court found imports (except one bill of entry) occurred before self-assessment and were cleared after examination and value enhancement by the assessing officers. Where the proper officer, after scrutiny of invoices and samples, has assessed and cleared goods, the Revenue cannot, without evidence that the proper officer was misled or connived with the importer, treat the clearance as a basis for extended limitation. The mere issuance later of a show cause notice is insufficient if original examination and assessment occurred. Ratio vs. Obiter: Ratio - extended limitation cannot be invoked where goods were examined and assessed by the proper officer in the pre-self-assessment period absent evidence of suppression/connivance; Obiter - observations on the policy underlying assessment responsibility of customs officers. Conclusion: Extended period of limitation was not available to support demands for the earlier three bills of entry; those demands are time-barred. Issue 2 - Whether declaration as 'tailor tapes' constituted deliberate suppression/misdeclaration to attract anti-dumping duty Legal framework: Liability for anti-dumping duties depends on correct characterization/classification; wrongful description and concealment of brand/nature could attract duties and penalties if shown to be deliberate suppression. Precedent treatment: Authorities distinguish between innocent/classification disputes and deliberate misdescription; where declaration and supporting documents consistently describe goods and assessing officer clears them, that supports absence of mala fides. Interpretation and reasoning: The importer declared the goods as 'tailor tapes' consistent with supplier invoices and packaging; assessing officers examined consignments and enhanced value during assessment. Trade evidence indicated that such products are commonly referred to as tailor tapes. There was no evidence that the assessing officer was misled or acquiesced; a subsequent retracted statement by the second appellant cannot supplant the contemporaneous clearance and documentary record to prove deliberate suppression. Classification, valuation and import policy determinations are duties of the proper officer at assessment; merely differing classification by Revenue later does not, by itself, establish mala fide suppression by importer. Ratio vs. Obiter: Ratio - where the declared description matches supporting commercial documents and goods are examined and cleared by the proper officer, absence of independent evidence of connivance or concealment precludes a finding of deliberate suppression for invoking anti-dumping duty; Obiter - remarks on trade parlance and manufacturer practices being relevant corroborative material. Conclusion: The charge of deliberate suppression or misdeclaration to evade anti-dumping duty is unsustainable for the contested imports (except as to the single seized bill detailed separately), and anti-dumping demand cannot stand on that basis. Issue 3 - Reliance on post-clearance statements (including retracted statements) to establish suppression and impose penalties/confiscation Legal framework: Penalties and extended limitation require credible, voluntary, contemporaneous evidence of suppression or misstatement; retracted or disputed statements have limited probative value if contradicted by documentary records and assessment action. Precedent treatment: Jurisprudence treats retracted/conflicted statements with caution, especially where official assessment records and documentary evidence support the importer's declared position; penal consequences cannot rest solely on such statements. Interpretation and reasoning: The statement relied upon by authorities was retracted and contested as involuntary; it directly conflicts with invoices, packaging descriptions and the assessing officer's findings at clearance. Given that the assessing officer had examined and adjusted value, the Court held that post-clearance statements cannot substitute for the lack of independent proof of suppression or collusion by the assessing officer. Ratio vs. Obiter: Ratio - retracted or disputed post-clearance statements cannot, standing alone, justify invocation of extended limitation, imposition of anti-dumping duty, or penalties where contemporaneous documentary and assessment records contradict suppression; Obiter - on assessing volition and voluntariness of statements. Conclusion: Statements subsequently retracted are insufficient to sustain findings of suppression/misdeclaration and consequent penal or confiscatory orders in the absence of corroborative evidence. Issue 4 - Confiscation and redemption fine where goods are not available for seizure and were earlier cleared Legal framework: Confiscation under Sections 111(d)/(m) and redemption fines require availability of goods for seizure or that goods were imported in contravention of relevant statutory requirements; confiscation of goods already cleared and not under bond raises legal and factual problems. Precedent treatment: Authorities restrict confiscation/redemption fines where goods are not available for seizure or where the goods had been legitimately cleared after assessment, and stress proportionality between market value and redemption fine. Interpretation and reasoning: The adjudicating authority ordered confiscation of goods already cleared (and not available) and imposed an excessive redemption fine (Rs.10 lakhs) disproportionate to the adjudged value and to market value evidence. The Court noted that confiscation cannot be sustained in respect of goods not available for seizure and that redemption fines must be reasonable and based on legally sustainable confiscation. Where part of the consignments were cleared after assessment, confiscation and the high redemption fine were unsupportable. Ratio vs. Obiter: Ratio - confiscation and redemption fines cannot be imposed in respect of goods not available for seizure or where clearance after assessment negates the factual basis for such orders; Obiter - comments on reasonableness and proportionality of redemption fines. Conclusion: Orders of confiscation and the imposition of the stated redemption fine are unsustainable in law in respect of the cleared/unavailable consignments; the confiscation/redemption orders must be set aside. Issue 5 - Classification disputes as grounds for extended limitation and penal consequences Legal framework: Classification of goods is a matter for customs assessment; an importer's declared classification, where supported by documents and accepted at assessment, does not ipso facto amount to suppression permitting penal consequences. Precedent treatment: Consistent line of authority holds that classification differences, without evidence of mala fides or suppression, do not warrant confiscation or invocation of extended limitation; Customs may reclassify but penal consequences require additional proof. Interpretation and reasoning: The Court emphasized the division of responsibilities - the assessing officer has primary duty to determine correct classification. The importer's honest adoption of a classification based on supplier invoices and trade practice, and acceptance by the assessing officer at clearance, precludes treating the matter as suppression. Later reclassification attempts by Revenue cannot convert a bona fide classification dispute into a case of concealment absent independent evidence of intent to evade duty. Ratio vs. Obiter: Ratio - classification disputes resolved at assessment in favour of the importer (or at least acted upon by assessing officer) do not justify penal treatment or extended limitation absent proof of deliberate concealment; Obiter - on the role of customs in ensuring correct classification. Conclusion: Classification dispute here does not support the contention of suppression; therefore classification alone could not sustain the impugned demands, penalties or confiscation. Overall Disposition Given that the majority of the imports were pre-self-assessment and cleared after examination, that declarations matched commercial invoices and packaging, that assessing officers enhanced value and cleared consignments, and that relied-upon statements were retracted/contested, the impugned orders invoking extended limitation, demanding anti-dumping duty, imposing penalties and ordering confiscation/redemption fines could not be sustained and were set aside.