2006 (6) TMI 281 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods.
2. Valuation of imported goods.
3. Penal liability under Section 112 of the Customs Act, 1962.

Detailed Analysis:

1. Classification of Imported Goods:

The appellants challenged the classification of goods imported under three Bills of Entry, declared as synthetic waste. The Department, based on the Chief Chemist's report, classified the goods as synthetic filament tow (acrylic) or synthetic staple fibre, not as waste. The test reports indicated that the samples were of uniform diameter, free from undrawn, fused filaments, and other extraneous matter, and composed of acrylic. The Commissioner relied on these reports, rejecting the appellants' claim that the goods were waste. The appellants' argument that the test report was incomplete was dismissed, as the report provided sufficient details to confirm the goods were not waste. The packing lists and labels recovered from the bales, which described the goods as acrylic fibre, further supported the Department's classification. The letter from Monsanto dated 3rd April 1996, which described the goods as off-quality reject material, was not addressed to the appellants and did not refer to the invoices issued by Monsanto, thus was not considered credible evidence.

2. Valuation of Imported Goods:

The Commissioner enhanced the value of goods declared in two Bills of Entry from US $1.00 per kg to US $1.75 per kg, based on contemporaneous imports. The appellants argued that the transaction value should be accepted unless specific exceptions under Rule 4(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, applied. The Department's contention of gross under-valuation was not supported by evidence of any special circumstances as required under Rule 4(2). The Tribunal held that the declared value of US $1.00 per kg should prevail, in line with the Supreme Court's decision in Eicher Tractors Ltd. v. CC, Mumbai, which mandates acceptance of the transaction value unless exceptions apply.

3. Penal Liability under Section 112 of the Customs Act, 1962:

The appellants were penalized for misdeclaring the goods as waste. The Tribunal found clear evidence of violation of Section 112. However, it was noted that imposing penalties on both the sole proprietor and the proprietory concern for the same offence was impermissible. Therefore, the penalty on the proprietory concern was set aside, while the penalty on the sole proprietor, Shri R.K. Goyal, was upheld. The penalties on the other appellants were deemed adequate and sustainable.

Conclusion:

The Tribunal modified the impugned order as follows:
1. The goods declared as waste under three Bills of Entry were correctly classified as acrylic fibre under Heading 5503.30, and the order of confiscation was upheld.
2. The CIF value of goods declared in two Bills of Entry was restored to US $1.00 per kg, rejecting the enhanced value of US $1.75 per kg.
3. The assessable value of goods in the three Bills of Entry classified as acrylic fibre was also set at US $1.00 per kg.
4. The penalty on M/s. Shri Ram Fibres and Shri R.K. Goyal was upheld, but the penalty on M/s. Radiant Synthetic Industries was set aside.

All three appeals were disposed of accordingly.