TaxTMI 
TaxTMI 
2024 (7) TMI 326
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.... of demand with interest and imposition of redemption fine and penalties on it. 3. Customs Appeal No. 52470 of 2019 is filed by M/s. Kay Pee Enterprises [Kay Pee] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 4. Customs Appeal No. 52482 of 2019 is filed by M/s. Universal Impex [Universal] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 5. Customs Appeal No. 52481 of 2019 is filed by M/s. S P Enterprises [SP] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 6. Customs Appeal No. 52479 of 2019 is filed by M/s. Goodluck Trading Co. [Goodluck] to assail the confirmation of demand with interest and imposition of redemption fine and penalties on it. 7. Customs Appeal No. 52474 of 2019 is filed by Shri Sanjay Puri [Sanjay] to assail the penalty of Rs. 5,80,000/- imposed on him. 8. Customs Appeal No. 52472 of 2019 is filed by Shri Amit Malhotra [Amit] to assail the penalty of Rs. 3,00,000/- imposed on him. 9. Customs Appeal No. 52471 of 2019 is filed by Shri Sanjay Malhotra [Malhotra] to assail the penalty of R....
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....mmittee gave its reports according to which the HQ-Z series goods declared as 'polyester knitted 'girls pyjamas' or leggies were made of woven viscose fabrics. 'MNS-LBK' variety was made of Polyester/polyurethane knitted fabrics and that 'HQ-Z' series was made of woven viscose fabrics. Further, as per the reports of the Textile Committee, goods described as 'girls' pyjamas' in the test memo were 'Polyester/polyurethane knitted 'girls trousers' classifiable under Harmonised System of Classification [HS] 6104 63 and that goods described as 'girls leggies' in the test memo were 'Viscose woven 'girls trousers' classifiable under HS 6204 69. 19. The imported goods were therefore, seized but major portion of the goods were subsequently released. Show Cause Notice [SCN] dated 9.6.2017 was issued by the DRI to the importers, their partners and proprietors proposing to hold that the imported goods were polyester knitted trousers for girls classifiable under CTI 6104 30 00 and Viscose Woven Trousers classifiable under CTI 6204 69 90. It was proposed to recover the differential duty, confiscate the seized goods and impose penalties on the importers as well as on the partners or proprietors ....
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....order to re-classify the same under CTH No. 62046990 of the Customs Tariff Act, 1975; (ii) I confirm the demand of differential customs duty of Rs. 12,77,696/- as per details mentioned in Annexure-B of this order under section 28 of the Customs Act, 1962 and order that the same be recovered from M/s Sahi Trading Company, New Delhi along with the interest at the appropriate rates under section 28AA of the Act ibid be recovered from M/s Sahi Trading Company, New Delhi on the above amount of short payment of customs duty; (iii) I impose a penalty of Rs. 12,77,696/- on M/s Kay Pee Enterprises, New Delhi under Section 114A of the Customs Act, 1962 for the contraventions mentioned above. Under first proviso to section 114A, they may avall the benefit of reduced penalty to the tune of 25% of the penalty amount if the entire amount of duty along with interest is paid within a period of 30 days from the date of communication of this order, then the penalty amount under Section 114A of the Act ibid shall be reduced to 25% provided the reduced penalty is also paid within the same time frame; (iv) I refrain from imposing any separate penalty on M/s Kay Pee Enterprises, New Delhi under Se....
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....507 (Haryana) alongwith interest at the appropriate rates under section 28AA of the Act ibid. (ii) (iii) I impose a penalty of Rs. 23,81,648/- on M/s S.P. Enterprises, Plot No. 649, Part-A, Bahadurgarh, Jhajjar-124507 (Haryana) under Section 114A of the Customs Act, 1962 for the contraventions discussed above refrain from imposing any separate penalty on them under Section 112 of the Customs Act, 1962 as penalty under section 114A of the Act ibid has been imposed upon them. Under first proviso to Section 114A of the Act ibid, I give M/s S.P. Enterprises, Plot No. 649, Part-A, Bahadurgarh, Jhajjar-124507 (Haryana) an option to avail the benefit of reduced penalty to the extent of 25% of the penalty amount if the entire amount of duty along with interest is paid within a period of 30 days from the date of communication of this order. (E) M/s Goodluck Trading Company, Shop No. 7, B-7, Inderlok, New Delhi-110035: (i) reject claim of M/s Goodluck Trading Company, Shop No. 7, B-7, Inderlok, New Delhi-110035 for classification of "Polyester knitted trousers" for girls imported by them as "Pyjamas" under CTH No. 61083990 as per details mentioned in Annexure-E to this order and re-cla....
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....0/- 7 Shri Vinod Kumar Thapar - - 15,00,000/ I refrain from imposing separate penalty on the above persons under Section 114A & 114AA of the Customs Act, 1962 for the reasons mentioned above;" 21. Aggrieved, the importers and their partners and proprietors filed these appeals. Revenue was also aggrieved by the impugned order as no penalties were imposed under sections 114A and 114AA of the Customs Act. Hence, Revenue filed these appeals. Submissions on behalf of the importers and their partners/proprietors 22. Learned counsel for the importers, their partners and proprietors made the following submissions: (i) The Bills of Entry were filed by the appellants classifying the imported goods as per their understanding and the goods were cleared after verification and examination by the proper officers. Therefore, the importers cannot be alleged to have mis-declared anything even if the classification is incorrect. Therefore, confiscation of the goods under section 111(m) of the Customs Act is not sustainable; (ii) The samples were drawn by DRI after the goods had been cleared from the warehouses whereas the goods which were actually imported were examined by the custo....
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.... were they tested nor was any expert opinion sought in respect of those goods. Therefore, the demand is not sustainable; (xiv) Even if the classification is decided against the importers, there is no reason to impose penalties or confiscate goods or impose redemption fines; (xv) Learned counsel submitted for our perusal samples of the imported goods. Submissions on behalf of Revenue 23. Learned Special Counsel assisted by the learned authorised representative for the Revenue made the following submissions. (i) While learned counsel for the importers submitted samples for perusal of the bench, it is not clear as to how and when they were drawn. Extra copies of the samples drawn and sealed by the officers along with signatures of the officers and the importers have been submitted after the hearing for perusal of the bench; (ii) On the core issue of classification of the subject goods, the garments in question enveloped each leg separately and extended from the hip to the ankle. These had two seams and were hemmed at the bottom. These garments were not part of a set comprising a top and bottom and had elasticated waist band. These are in the nature of formal wear and qualify....
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....r the import work for all the firms. Shri Puri refused to comment about the reports of the Committee. Statements of Shri Sanjay Puri have been corroborated by all others. However, he also routinely retracted some of his statements 2 to 4 months after they were recorded. Such retractions were investigated and found to be baseless. Nevertheless, he had confirmed the averments made earlier even after the retraction; (ix) Scrutiny of the records and investigations carried out indicated that the said importers had been importing Polyester Knitted Trousers and Viscose Woven Trousers under various consignments declared as Polyester Knitted Leggies/Pyjamas in the past; (x) In respect of 12 out of 13 Bills of Entry, Girls trousers of "HQ-Z" series, made of viscose fibre were declared as 'Polyester Knitted Leggies/Pyjamas'. This constituted clear misdeclaration and contravention of the provisions of Section 46, thus attracting confiscation under section 111(m) and consequential penalties; (xi) As per the import documents submitted by the appellant importers, the suppliers of the impugned garments were M/s.Sin Zhong Import and Export Pte. Ltd. Two Directors of this Company were Shri V.K....
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.... is the nature of the classification of the imported goods and who can do it? Can an expert determine the classification of the goods under the Customs Tariff? (c) Were the goods liable for confiscation under section 111(m)? If so, were the redemption fines imposed fair? (d) Were the penalties imposed correct and fair? (e) Did the Commissioner err in not imposing certain additional penalties under certain sections as indicated in Revenue's appeals? Pyjamas or trousers and what is the correct classification? 25. According to the declaration by the importers, the goods were girls pyjamas. It is not in dispute that the declarations in the Bills of Entry were as per the import documents. The goods were self-assessed by the importers considering them as pyjamas. The imported goods were also examined by the officers and cleared. The importers then sold the goods to others and according to the learned counsel for the appellant, DRI officers had not enquired from the buyers as to the nature of the goods that they bought. 26. Samples of the goods were produced by the learned counsel before us during the hearing. These samples were obtained from the importers and they were not drawn....
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....le received on the same date with the same Test Memo and the covering letter of DRI but states that it was tested from 8.7.2016 to 21.9.2016 but gives a different report of the same parameter HS Classification of Garment and it says "In our opinion the submitted garment may be classified as "Polyester/Polyurethane Knitted Girls Trouser" under HS code 61.04.63". This report also remarks that this parameter was subcontracted to EP&QA, Naraina (New Delhi). 28. Thus, according to the above test report and additional test report, the sample received on 8.7.2016 was tested from 8.7.2016 to 30.8.2016 and the composition of the fabric was determined but determination of the nature of the garment and its HS classification was outsourced to EP & QA, Naraina (New Delhi) but it was not possible to determine the HS classification because the sample got de-shaped and destroyed during testing. Surprisingly, thereafter, based on the same sample, the same EP&QA to whom the determination of HS classification was outsourced again tested the same sample (which was de-shaped and destroyed earlier) for a longer period from 8.7.2016 to 21.9.2016 and the opinion in the test report is that the garment sho....
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....hey are not 'girls trousers' as per trade parlance. As per the original test reports also, this parameter could not be determined. It is only the additional test reports submitted on the basis of the same samples which were already destroyed during testing, that the expert from the Textile Committee formed an opinion that they were 'girls trousers'. 33. In view of the above, the finding in the impugned order that that the garments in question were 'girls trousers' cannot be sustained and needs to be set aside as it is primarily based on the revised subjective opinion of an expert contrary to the overwhelming documentary evidence and the packing of individual garments, none of which call them trousers. Classification under Customs Tariff Heading and who is competent to decide it 34. Goods imported into India are chargeable to duties at the rates specified in the Customs Tariff (Section 12). The Customs Tariff classifies all goods into Sections (numbered with Roman numerals) and each section into Chapters (two-digit numbers). Within each Chapter, goods are classified into four-digit headings and further into six-digit sub-headings and still further into eight-digit Customs Tariff ....
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....ion of the person classifying the goods and is not a matter of fact. It is a quasi-judicial decision and is appealable. 37. Classification of goods has to be done as per the Customs Tariff. The General Rules of Interpretation [GRI] help in classifying the goods. Classification is not a matter of fact to be determined by an expert but a quasi-judicial matter to be decided as per the law. 38. The subjective opinion of the experts from the Textile Committee regarding the correct harmonised system (HS) classification of the imported goods is irrelevant. The adjudicating authority cannot classify the goods under Customs Tariff based on the opinion of an expert. An expert's opinion can be sought on the nature of the goods (say, nature of the fabric used, composition of fibres- natural or synthetic, etc.) However, the adjudicating authority cannot classify the goods because some expert opines so. He has to classify the goods as per the Customs Tariff read with the GRI. Nothing in the Customs Tariff Act, 1975 or the General Interpretation Rules of the Tariff or the Customs Act provides for classification based on the subjective opinion of any expert. 39. Classification is an appealable,....
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....because the appellant self-assessed the goods classifying them under the Customs Tariff Heading, which, according to it, was correct. Since the goods were not liable to confiscation, no penalty could have been imposed under Section 112. 44. According to the Revenue, classification of goods by the appellant importer is part of the entry made under Section 46 of the Customs Act, i.e., the Bill of Entry and since the goods did not match this part of the Bill of Entry, the imported goods were squarely covered by and were liable to confiscation under Section 111(m). Since the goods were liable to confiscation, penalty can be imposed and was correctly imposed under Section 112. 45. We find that classification of the goods, their valuation and applying exemption notifications are all part of assessment. Thus, the Bill of Entry has factual elements such as the nature of the goods, quality, quantity, weight, transaction value, country of origin, etc. which all need to be correctly declared and elements which are in the nature of the opinion of the importer such as classification of the goods, exemption notifications which apply, etc. While the facts are verifiable as correct or incorrect,....
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....elf-assessing the duty under Section 17 and indicated in the Bill of Entry do not match the classification of the goods or the exemption notifications which the proper officer may apply during re-assessment or some post clearance opinion of DRI or Audit, it would result in absurd results. The importer cannot predict the mind of the proper officer much less, the minds of any DRI officers after the goods are cleared, and self-assess duty so as to conform to it. Insofar as the valuation is concerned, the importer is required to truthfully declare the transaction value, any additional consideration and relationship with the overseas seller. He is not required to predict whether the proper officer will value under Rule 12 and if so, what value he will determine. Lex non cogited impossibilia -the law does not compel one to do impossible things. If the classification and exemption notifications in the Bill of Entry do not match the views which the proper officer may take later during re-assessment or by DRI audit party, or in any other proceedings, the goods cannot be confiscated under Section 111(m). The case of the Revenue in these appeals are that the classification of the goods by the....
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....ng, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, 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; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees,] whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereinafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees][whichever is the greater; (iv)in the case of goods falling both under clauses (i) and (iii), to a penalty [not exceeding the difference between the declared value ....
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.... cases.-Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where t....
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....rs, adjudicating authority and appellate authorities as per the Customs Tariff read with the General Rules of Interpretation. While expert opinion may be sought on the nature of the goods, classification cannot be based on the opinion of the expert. The GRI do not provide for classification based on any opinion of any expert. (c) Even if the classification of the goods in the Bills of Entry is not in conformity with the views of the proper officer or any other investigating agency or audit goods cannot be confiscated under section 111(m) because there is no mis-declaration (of any fact) but only classification as per the importer's opinion. Even if the classification is incorrect, the goods cannot be confiscated. (d) Consequently, no penalty can be imposed under section 112. (e) Penalties under section 114 A and 114AA also cannot be imposed as there was neither any short payment of duty nor any mis-declaration- let alone wilful mis-declaration. 58. In view of the above, the impugned order is set aside with consequential relief to the importers and their partners/proprietors. The 24 appeals are disposed of as below: i. Customs Appeal No. 52255 of 2019 filed by M/s. Sahi Tra....