2007 (9) TMI 204 - Commission - Customs

Issues Involved:
1. Misdeclaration of imported goods.
2. Applicability of Section 123 of the Customs Act, 1962.
3. Admissibility of the application under Section 127B of the Customs Act, 1962.
4. Immunity from fine, penalty, and interest.

Issue-wise Detailed Analysis:

1. Misdeclaration of Imported Goods:
The applicant filed a Bill of Entry (B/E No. 396475 dated 26-9-2006) for the clearance of 'Polyester Fabrics' declared as Dyed Woven Polyester Fabric containing 85% or more by weight of non-texturized polyester filament yarn. The goods were examined and found to be made of 100% texturized polyester filament yarn, contrary to the declaration. Consequently, the goods were seized under the belief that they did not correspond to the declaration given in the bill of entry. The applicant admitted to the misdeclaration to claim partial Customs duty exemption.

2. Applicability of Section 123 of the Customs Act, 1962:
The goods in question were specified under Notification No. 204-Cus. dated 20-7-84 issued under sub-section (2) of Section 123 of the Customs Act, 1962. Section 123 shifts the burden of proof to the person from whose possession the goods were seized to prove that they are not smuggled goods. The Revenue argued that the application should not be admitted as the goods were notified under Section 123, making the application inadmissible under the third proviso to Section 127B.

3. Admissibility of the Application under Section 127B of the Customs Act, 1962:
The applicant contended that their case should be admitted based on the precedent set by a Five Member Special Bench in the case of IN RE: Idris Y. Porbunderwala. The Special Bench had concluded that applications are not per se barred in relation to goods listed under sub-section (2) of Section 123, but the Commission can determine the invocability of Section 123. However, the Revenue reiterated that the goods were notified under Section 123, and the application should not be admitted.

4. Immunity from Fine, Penalty, and Interest:
The applicant sought immunity from fine, penalty, and interest, arguing that all conditions for admission of the application under Section 127B had been fulfilled. The Revenue opposed this, stating that even if the application is entertained, immunity should not be granted.

Judgment Analysis:

Examination of Legal Provisions:
The Bench first examined the legal provisions related to the third proviso to sub-section (1) of Section 127B and Section 123 of the Customs Act, 1962. It was found that the goods "fabrics made wholly or mainly of synthetic yarn" are specified under Notification No. 204-Cus. dated 20-7-84, making Section 123 applicable to the imported goods.

Application of Special Bench Findings:
The Bench referred to the findings of the Special Larger Bench in the case of Idris Y. Porbunderwala. The Special Bench had concluded that applications are not per se barred in relation to goods listed under sub-section (2) of Section 123, but the Commission can determine the invocability of Section 123. However, the Special Bench also held that the bar laid down in the third proviso to sub-section (1) of Section 127B could come into play if the goods specified under Section 123 were cleared under a Bill of Entry but subsequently seized on the reasonable belief that they are smuggled goods.

Conclusion:
The Bench found that in this case, the Bill of Entry was filed for clearance of goods specified under Section 123, which did not tally with the particulars declared. The goods were seized under the reasonable belief that they were smuggled. Therefore, the case falls within the domain of the Special Bench's findings, and the bar laid down in the third proviso to sub-section (1) of Section 127B would come into play.

Final Decision:
The application was rejected under Section 127C(1) of the Customs Act, 1962, in light of the third proviso to sub-section (1) of Section 127B. However, the Bench noted that benefits claimed by the applicants could be considered by the concerned Departmental authorities as per law on merits.