TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 18
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....scribed as 'Thorn' and filed a Bill of Entry dated 30.12.2020 to clear it. The Institute of Scrap Recycling Industries, Inc. [ISRI], Washington classifies various types of aluminium scrap and has a standard nomenclature for them. Generally, scrap of aluminium is traded using the terms prescribed by ISRI. 'Thorn' imported by the importer was one of the categories of aluminium prescribed by ISRI. 3. Import of goods into India can be regulated under various laws but the primary regulation is by the Foreign Trade Policy formulated under the Foreign Trade (Development and Regulation) Act, 1992 [FTDR Act]. As per this policy, goods are classified based on the HSN but further sub-classified up to 8 digit level and against each good, the policy is specified as 'free' i.e., there are no restrictions on import or 'restricted' which means the goods can be imported only if one has an import licence from the Director General of Foreign Trade or 'prohibited' which means that the goods cannot be imported at all. Often any restrictions on imports under any other law is also indicated as 'Policy notes' in the ITC (HS) classification published by the DGFT. These policy notes are not relevant for th....
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....rap not covered by 76020010 are classifiable under ITC (HS) 76020090 as 'other waste and scrap' and their import is restricted. 'Thorn' imported by the appellant does not fall under 76020010 and it falls under 76020090 and its import was restricted, i.e., one would require a licence from the DGFT to import it. 8. The importer classified the Thorn under 76020010 instead of the correct classification of 76020090. The officers noticed the discrepancy while assessing the Bill of Entry and asked the importer to produce copy of the licence and the importer could not do so because it had no licence to import Thorn. 9. The consignment was seized under section 110 and handed over to the custodian of the Inland Container Depot, Jaipur for safe custody. Samples of the scrap were sent to the chemical examiner, Team Test House, which is a government approved laboratory for testing. The test report showed that the scrap had 98.8% aluminium and some other metals. As per the importer's test report, it was about 94% aluminium and the rest other material. 10. As the aluminium content was different from what was declared, it was proposed to reject the transaction value under Rule 12 of the Custom....
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....h the State Pollution Control Board for manufacture of aluminium ingots from aluminium scrap. While Thorn cannot be freely imported by all, it can be imported by actual users holding registration with Pollution Control Board. e) Alternatively, permission should have been granted for re-export of the imported Thorn. f) The department's case is self-contradictory because on the one hand, it says the scrap is Thorn and on the other, it says that the aluminium content was 98.8% and as per ISRI definition, in Thorn the aluminium percentage is about 33%. g) Penalty under section 114AA can be imposed only in the case of exports and it cannot be imposed on imports. h) Imposing penalty under both section 112 and 114AA is not correct. i) As the goods were absolutely confiscated, the discussion about valuation is meaningless. The enhancement of value was based on test reports which were not accepted by the importer. j) Since penalty has been imposed on the importer, further imposition of penalty on the partner also is not correct. k) The appeal may be allowed and the impugned order may be set aside with consequential reliefs to the appellant. Submissions on behalf of the Reven....
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....on of penalty of Rs.3,50,000/- under section 114AA on Shri Jain. Re-classification of Thorn 17. There is no dispute about the rejection of the classification of the imported Thorn under CTI 7602 00 10 and its reclassification under CTI 7602 00 90. The importer's only contention is that it had mistakenly classified it under CTI 7602 00 10. Therefore, the re-classification must be upheld. Rejection of the transaction value under Valuation Rule 12 and re-determination of the value under Valuation Rule 9 18. The submission of the learned counsel for the appellant on this question is that since the goods were absolutely confiscated, the enhancement of value is meaningless. His second submission is that the enhancement of value was based on a test report which was not accepted by the importer. 19. Learned authorised representative draws attention of the bench to the letter dated 29.12.2020 signed by the authorised signatory for the appellant categorically accepting the re-determined value. This states that: a) the importer was informed of the grounds for rejection of the declared value under Valuation Rule 12 and Section 14 of the Customs Act; b) that they have gone through th....
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....der Valuation Rules 3,4 or 5, it shall be determined under Valuation Rule 7 or Valuation Rule 8 and at the request of the importer, Valuation Rule 8 can be applied without applying Valuation Rule 7 first. Valuation Rule 7 is a deductive method and it provides for determination of value based on the value of such goods sold in India and after making certain deductions. Valuation Rule 8 provides for computed value based on the cost of production of such goods in India. The Additional Commissioner, having recorded that these were not possible in this case, followed Valuation Rule 9 which is the residual method. He determined the value as per the method recommended by the Directorate General of Valuation in such cases based on the aluminum content of the imported scrap and the London Metal Exchange (LME) prices of the metal. 24. We find that the method followed by the Additional Commissioner for determining the value is correct and proper and this decision has been correctly upheld by the Commissioner (Appeals) in the impugned order. We find no reason to interfere with the valuation. Absolute confiscation of the imported Thorn 25. Absolute confiscation of the goods under Sections 1....
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....uty and charges payable in respect of such goods. (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. Explanation.-For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received. 28. Thus, if the confiscated goods are 'prohibited', the option of redemption may be given and if they are not, the option shall be given. As discussed earlier, the term 'prohibited' under section 2(33) of the Customs Act includes those goods where the import is permitted subjected some conditions and such conditions are not fulfilled. If the conditions are fulfilled then they will not be 'prohibited goods'. Thorn is a restricted good, i.e., it could be imported with a licence from DGFT. Since....
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.... by filing the Bill of Entry under section 46 to clear imported goods and makes an entry by filing the Shipping Bill under section 50 to export goods. The importer is also required to self-assess the duty payable under section 17 (1) of the Customs Act and the proper officer can re-assess the duty. There is no separate method by which the importer can self-assess duty. The Bill of Entry filed under Section 46 contains not only the details of the goods such as the nature, quality, quantity, exporter, country of origin, etc. but also contains some fields such as Customs Tariff Item, value of the goods, exchange rate, exemption notifications which apply, etc. Once these fields are also filled, the system calculates the amount of duty payable. Thus, the Bill of Entry contains: a) Facts regarding the goods- the description, quality, quantity, country of origin, etc.; and b) Opinions of the importer such as classification, exemption notifications which apply, etc. 31. While facts can be verified as correct or incorrect, classification, etc. are merely matters of opinion. The importer self-assesses goods as per his understanding and the officer can re-assess the duty as per his under....
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....se the goods did correspond to the declarations and only the classification and the valuation which are matters of opinion were changed by the officer. 36. The imported Thorn was also confiscated under section 111(o). It provides for confiscation of any goods which are exempted from duty or any prohibition subject to conditions and where such conditions were not fulfilled. Import of Thorn was 'restricted' as per the FTP which meant it could be imported only if one has a licence. The appellant clearly did not have a licence to import. Therefore, it was correctly liable to confiscation under section 111(o). 37. Thus, we find that the Thorn imported by the appellant was correctly confiscated under section 111(d) and 111(o) but its confiscation under section 111(m) was not correct. The question which arises is, if in this factual matrix, was the absolute confiscation of the imported Thorn correct or it could have been released on payment of redemption fine. 38. According to learned counsel, it should have been released on payment of redemption fine. According to learned authorised representative, it was not released on redemption fine because it might be hazardous to the society at ....
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.... section 111, or abets the doing or omission of such an act, or (b)... shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; 42. The importer imported Thorn without the required licence and therefore it is squarely covered by section 112(a). Penalty not exceeding the value of the goods could be imposed under this section. The value of the goods as determined by the impugned order is Rs. 27,48,405/- and therefore, a penalty of Rs. 4,00,000/- is within the limits and is in the factual matrix, in our opinion, just and proper. 43. It needs to be pointed out the section lays down that certain persons in certain circumstances will be liable to penalty. It does not say that a penalty shall be imposed. Discretion lies with the adjudicating and appellate authorities to impose penalty or not and also to decide the quantum of penalty. 44. As far as the penalty on Shri Jain is concerned, we find that he was a partner of the importer and in that capacity, he played the role in importing the....