2004 (2) TMI 562 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods as ELISA kits or raw materials.
2. Eligibility for customs duty exemption.
3. Allegation of misdeclaration and evasion of customs duty.
4. Validity of extended period for demand under Section 28(1) of the Customs Act.
5. Imposition of penalty and confiscation of goods.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods as ELISA Kits or Raw Materials:
The core issue was whether the imported consignments were complete ELISA kits or merely raw materials for their manufacture. The Commissioner of Customs determined that the consignments consisted of bulk ingredients sufficient for conducting 25,000 tests and were not marketable as individual ELISA kits. The Commissioner noted that the bulk ingredients were repacked into smaller kits of 48 tests each by the importer, thus concluding that the goods were not entitled to exemption as ELISA kits.

2. Eligibility for Customs Duty Exemption:
The appellant contended that they imported bulk ELISA kits, which were later repacked for sale. They argued that the goods were ordered and supplied as test kits, not as raw materials. The Tribunal examined the purchase orders and invoices, which indicated that the transactions were for a specific number of tests (e.g., 12,500 tests, 25,000 tests) and not for individual raw materials. The Tribunal concluded that the goods were indeed ELISA kits as understood in trade and commerce, and thus eligible for exemption under the relevant notifications.

3. Allegation of Misdeclaration and Evasion of Customs Duty:
The show cause notice alleged that the appellant misdeclared the goods to evade customs duty. However, the Tribunal found that the appellant had described the goods in the import documents as they were transacted commercially, i.e., as a certain number of tests. There was no evidence of misdeclaration or suppression of facts. The Tribunal held that the description of the goods was consistent with commercial practice and not misleading.

4. Validity of Extended Period for Demand under Section 28(1) of the Customs Act:
The demand for unpaid duty was issued three years after the last import, invoking the extended period under Section 28(1) of the Customs Act. The Tribunal noted that the extended period is applicable only in cases of collusion, wilful misstatement, or suppression of facts. Since the appellant had accurately described the goods in line with commercial transactions, there was no basis for alleging fraud or suppression. Therefore, the extended period for demand was not justifiable.

5. Imposition of Penalty and Confiscation of Goods:
Given the Tribunal's findings that the goods were correctly described and that there was no misdeclaration or suppression, the imposition of penalties and the order for confiscation under Sections 112/114A and 111(m) of the Customs Act were deemed unwarranted. The Tribunal set aside the penalties and confiscation orders.

Conclusion:
The Tribunal ruled in favor of the appellant on both the merits of the classification and the issue of limitation. The appeal was allowed, and the impugned order was set aside, granting consequential relief to the appellant.