2005 (5) TMI 506 - AT - Customs

Confiscation and penalty - Marble Blocks - misdeclaration of weight - HELD THAT - The Marble Gross Weight are approximate arrived weights and differences would be manifest due to reasons of change in scales etc. In that view of the matter, the importers declarations cannot be held to be a misdeclaration on the BE as regards weight. Since the chargeable weight in BE 613774 remains as 65.24 MTs in spite of ascertained weight to be less than Gross Weight as declared; no reason or/ relationship of a mathematical Formula to Gross weight and chargeable weight being established, the proposed to levy duty on values arrived by multiplying per MT the chargeable Rate price with ascertained weight cannot be upheld. If a Baker sells Hot Cross Buns at Rs. 12 to a dozen, then for the thirteenth Bun put on the Basket as Bakers Dozen understood in that Trade cannot call for the Bakers Dozen to be valued at Rs. 13, (misdeclarations called for, as also to demand duty ad valorem pro rata on thirteen Buns price of Rs. 13. However, the situation would be different if the rate of duty is specific and per Bun, then duty will have to be calculated on 13 Buns multiplied by specific rate. Trade Practices are to be honoured if genuine and established charges of misdeclaration in section cannot be upheld. We find therefore no reason to uphold confiscation u/s 111(i) /or 111(m) of the Customs Act, 1962 for the reasons of excess weight to call for a penalty u/s 112(a) on the importer or to charge duty on value as enhanced. Orders to that effect are set aside appeal allowed.

Issues:
1. Excess goods imported than declared.
2. Valuation and duty determination.
3. Redemption liability for confiscation.
4. Penalty under Section 112(a) of the Customs Act, 1962.
5. Discrepancy in weight declarations.
6. Trade practice of invoicing chargeable weight.
7. Challenge to misdeclaration allegations.
8. Dispute over weight assessment and valuation.
9. Confiscation under Sections 111(l) & 111(m).
10. Penalty under Section 112(a) set aside.

Issue 1: Excess goods imported than declared
The appellants imported Marble Blocks in various consignments, where it was alleged that excess goods were imported than as declared. This led to a dispute over the valuation and duty determination, along with redemption liability for confiscation under Sections 111(l) & 111(m) of the Customs Act, 1962, and the imposition of a penalty under Section 112(a) of the act.

Issue 2: Discrepancy in weight declarations
The impugned order highlighted discrepancies in weight declarations across various Bill of Entry (BE) numbers, indicating differences in declared net weight and ascertained weight. The appellant argued that the excess weight was marginal, attributing it to a trade practice of invoicing based on chargeable weight, which differs from the gross weight shown in the invoices.

Issue 3: Trade practice of invoicing chargeable weight
The appellant contended that the chargeable weight of Marble Blocks was based on industry/trade practices, where the value was determined by the chargeable weight rather than the actual weight of the block. They argued that the difference in weight did not affect the value of the blocks, similar to how the price of milk is based on fat content percentage and not actual volume.

Issue 4: Challenge to misdeclaration allegations
The Revenue contested the appellant's submission, insisting on establishing misdeclaration of net weight and value. However, they did not question the charged rate per metric ton (MT) or the validity of the invoices. The Revenue's focus was on ascertaining the accurate weight of the blocks and challenging any misdeclaration.

Issue 5: Weight assessment and valuation dispute
After considering the submissions and evidence, it was found that there was a discrepancy between the chargeable weight of the blocks and the actual weight as declared and ascertained. The Tribunal recognized the trade practice of invoicing based on chargeable weight and accepted the industry standards, concluding that the importers' declarations were not misdeclarations regarding weight.

Issue 6: Confiscation under Sections 111(l) & 111(m)
Due to the lack of evidence supporting misdeclaration or intentional wrongdoing by the importers, the Tribunal set aside the orders for confiscation under Sections 111(l) & 111(m) of the Customs Act, 1962. The Tribunal emphasized the importance of honoring genuine trade practices and found no reason to uphold the proposed confiscation or penalty under Section 112(a).

Issue 7: Penalty under Section 112(a) set aside
In light of the findings regarding the weight discrepancies and trade practices, the Tribunal concluded that there was no basis for imposing a penalty under Section 112(a) on the importer. The orders for penalty and enhanced duty charges were set aside, and the appeal was allowed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai highlights the key issues, arguments, and conclusions regarding the dispute over excess goods importation, weight discrepancies, trade practices, misdeclaration allegations, and the final decision to set aside penalties and confiscation orders.

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