2003 (6) TMI 350 - AT - Customs

Summary

Issues:
1. Confiscation of diamonds under Section 111 of the Act and imposition of penalties.
2. Availing Kar Vivad Samadhan Scheme, 1998 and redemption of goods.
3. Determination of duty payable on diamonds by the Commissioner.
4. Applicability of exemption notification on diamonds.
5. Interpretation of Supreme Court judgments on duty liability of imported goods.
6. Discrepancy in following legal precedents by the Commissioner.
7. Consideration of declaration requirement for availing duty exemption.
8. Application of Baggage Rules to imported goods.
9. Justification of Commissioner's decision based on legal precedents.

Analysis:

1. The case involved the confiscation of rough and polished diamonds seized by customs officers, leading to penalties imposed on individuals and M. Ambalal & Co. The Collector ordered confiscation with an option to redeem on payment of a fine, which was confirmed on appeal by the Tribunal. Subsequently, the firm availed the Kar Vivad Samadhan Scheme, 1998, and deposited half of the penalty, leading to settlement under the scheme.

2. Despite availing the scheme, a dispute arose when the firm sought to redeem the goods in 1999, and the Commissioner demanded duty payment. This dispute escalated to the Supreme Court, which directed the assessing officer to determine the duty amount after considering relevant contentions. The Commissioner, in the subsequent order, held that duty was payable at 250%, rejecting arguments based on confiscation and exemption notification.

3. The appellant relied on a Supreme Court judgment regarding duty liability of imported goods under specific tariff headings. The departmental representative contested the exemption application due to lack of declaration, citing precedents and concerns about misuse if exemptions were granted without declarations.

4. The Supreme Court's interpretation of duty liability for imported goods, as discussed in various judgments, was crucial in determining whether duty was payable on the diamonds. The Tribunal's reliance on legal precedents and definitions of "dutiable goods" played a significant role in the analysis.

5. The Commissioner's decision was questioned for not following legal precedents accurately, especially regarding the declaration requirement for duty exemptions. The Tribunal emphasized the unconditional nature of the exemption notification and concluded that the exemption should apply to the goods in question.

6. The judgment highlighted discrepancies in applying legal principles, especially concerning the Commissioner's refusal to accept claims based on Supreme Court orders. The Tribunal found no justification for the Commissioner's decision in this context.

7. The appeal was allowed, setting aside the Commissioner's order, indicating the Tribunal's disagreement with the duty determination and supporting the appellant's position regarding the duty exemption on the imported diamonds.