2003 (6) TMI 421 - AT - Customs

Confiscation and redemption fine - Misdeclaration of goods - Mutilation - Penalty - Valuation

Summary

Issues Involved: Misdeclaration of goods, Under-valuation, Confiscation, Redemption fine, Mutilation of goods, Imposition of penalties, Determination of value for assessment purposes.

Issue-wise Detailed Analysis:

1. Misdeclaration of Goods and Under-valuation:
The firm imported fresh iron/steel bars/rods but declared them as heavy melting scrap (HMS) in the Bill of Entry. This misdeclaration was discovered upon examination by the officers of DRI and confirmed by two chartered engineers. The goods were found to be fresh iron and steel bars and rods, not scrap. The authorized representative of the firm admitted to the misdeclaration. The firm's partners did not appear before the adjudicating authority to establish their bona fide intentions. Consequently, the misdeclaration and under-valuation were deemed intentional, making the goods liable for confiscation under Section 111(m) of the Customs Act.

2. Confiscation and Redemption Fine:
Due to the misdeclaration, the goods were ordered to be confiscated. However, the Commissioner allowed the option to redeem the goods upon payment of a redemption fine of Rs. 2 lakhs. The classification of the goods under sub-heading 7214.20 of the Customs Tariff Act was upheld, and the redemption fine was considered neither arbitrary nor exorbitant.

3. Mutilation of Goods:
The appellants requested the release of the goods after mutilation, treating them as scrap. This request was denied based on the principle that equity relief cannot be extended to those guilty of fraud, suppression, and misdeclaration. The goods were found to be of prime quality and serviceable, not scrap. The cited cases by the appellants were distinguished as they involved different circumstances where the goods were either old, used, or not of prime quality.

4. Imposition of Penalties:
Penalties under Section 112(a) of the Customs Act were imposed on all appellants. The partners of the firm failed to prove their bona fide intentions. The authorized representative admitted to the misdeclaration. Sanjay Choudhary was penalized for attempting to remove the goods clandestinely. The penalties were upheld as they were seen as justified given the appellants' conduct.

5. Determination of Value for Assessment Purposes:
The value of the imported goods was ordered to be determined under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. However, the adjudicating authority did not comply with the requirements of this rule, as the value was incorrectly based on the selling price of the goods in India, which is prohibited by sub-rule (2). Therefore, the determination of value was set aside, and the matter was remanded for re-evaluation in compliance with Rule 8, with an opportunity for the appellants to be heard.

Conclusion:
Except for the determination of the value of the goods, the impugned order of the adjudicating authority was upheld. The matter was remanded for fresh determination of the value in accordance with Rule 8 of the Customs Valuation Rules, with an opportunity for the appellants to present their case. The appeals were disposed of accordingly.