2000 (11) TMI 483 - AT - Customs

Waiver of Duty & Penalties Granted in Goods Misdeclaration Case

The tribunal granted the applications for waiver of duty and penalties by two companies involved in a case concerning misdeclaration of goods under ... Waiver of deposit of duty and penalty - Mis-declaration / suppression - Benefit under notification for goods capable of being used as insole sheets in the leather industry - Evidentiary value of expert institute reports and samples - Prevalent Customs practice and retrospective application of changed practice - Limitation under Section 28(1) of the Customs Act, 1962Waiver of deposit of duty and penalty - Balance of convenience - Prevalent Customs practice - Applications for waiver of deposit of duty and penalty were allowed unconditionally for the hearing of the appeals. - HELD THAT: - The Tribunal examined whether the applicants should be directed to deposit the duty and penalty sought to be recovered pending disposal of the appeals. The record showed that at the relevant time Mumbai Customs House's practice was to allow benefit of Notification No.11/97 in respect of nylon tericot flocking fabric and that Board Circular No.74/98-Cus. acknowledged that practice while prescribing that benefit be given subject to adducing evidence of intended use. The import by the applicants pre-dated the change in practice made applicable from October 1998. No sample was taken from the applicants' consignments and the revenue relied on samples and reports drawn from other consignments. In view of these facts and the existence of contradictory expert opinions, the Tribunal found the balance of convenience in favour of the applicants and waived the requirement of deposit of duty and penalty unconditionally until disposal of the appeals. [Paras 9, 10]Waiver of deposit allowed unconditionally for hearing of the appeals.Mis-declaration / suppression - Evidentiary value of expert institute reports and samples - Benefit under notification for goods capable of being used as insole sheets in the leather industry - Allegation of mis-declaration and suppression was not sustained for the purpose of directing deposit because of contemporaneous practice, absence of samples from the applicants' consignments and contradictory expert opinions. - HELD THAT: - The revenue's case rested on the contention that the applicants mis-declared the imported nylon tericot flocking fabric as being capable of use as insole material and thereby wrongly availed concessional duty under Notification No.11/97. The Tribunal noted that the revenue relied upon CLRI and IILP opinions and samples taken from other consignments, whereas the applicants produced a CLRI certificate and an opinion of the Footwear Design & Development Institute supporting their contention. Additionally, correspondence from Mumbai Customs House admitted that nylon tericot fabric was treated as usable for insole manufacture and the Board circular recognised the existing practice. Given that no sample from the applicants' consignments was taken and expert opinions were conflicting, the Tribunal concluded that suppression or mis-declaration could not be alleged so as to justify immediate deposit. [Paras 4, 5, 6, 9, 10]On the available material the allegation of mis-declaration/suppression could not be sustained for directing deposit; contested on merits and left for determination in the appeals.Final Conclusion: Having regard to contemporaneous Customs practice, absence of samples from the applicants' consignments and conflicting expert opinions, the Tribunal found the balance of convenience in favour of the applicants and allowed the applications by waiving the deposit of duty and penalty unconditionally pending disposal of the appeals. Issues:- Duty and penalties waiver applications.- Misdeclaration of goods under Notification 11/97.- Contradictory opinions from CLRI and IIPL.- Evidence of goods being used in leather industry.- Allegation of suppression or misdeclaration.- Sample not taken from imported goods.- Prevalent practice at Mumbai Customs House.- Balance of convenience in favor of applicants.Analysis:The case involved applications for waiver of duty and penalties by two companies, each facing a duty demand and penalty imposition for misdeclaration of goods under Notification 11/97. The duty was confirmed on the grounds that the imported goods were not capable of being used as insole sheets in the leather industry, contrary to the benefit claimed. The applicants argued that the goods could be used as insole material for leather shoes, presenting certificates from CLRI and the Footwear Design & Development Institute to support their claim. They also referenced correspondence between Mumbai Customs House and the Directorate of Revenue Intelligence to show the prevalent practice of granting exemption under Notification 11/97 for similar goods.The applicants highlighted the circular dated 6-10-1998, which allowed nylon tericot flocking fabric to be cleared under Notification 11/97 if evidence was provided to show the goods were meant for use in the leather industry. They argued that suppression or misdeclaration could not be alleged against them based on the existing practice at the time. Additionally, the fact that no sample was taken from the imported goods further supported their case, as the revenue relied on samples from other consignments. The conflicting opinions from CLRI and IIPL regarding the usability of the goods in the leather industry added complexity to the case.After considering all arguments and evidence presented, the tribunal found that the balance of convenience favored the applicants. Therefore, the deposit of duty and penalty was unconditionally waived for the hearing of the appeals, and the applications for duty and penalties waiver were allowed.