2006 (3) TMI 669 - AT - Customs

Summary

Issues Involved:
1. Confirmation of duty against the appellants.
2. Reduction of penalties imposed on the appellants.
3. Remand of the matter to the Commissioner for fresh consideration.

Issue-Wise Detailed Analysis:

1. Confirmation of Duty Against the Appellants:
The primary issue was whether the duty should be confirmed against the appellants or if the matter should be remanded to the Commissioner for fresh consideration. The Third Member concluded that the matter did not require any fresh consideration by the Commissioner. The final majority order confirmed the demand of duty against the appellants.

2. Reduction of Penalties Imposed on the Appellants:
The penalties imposed on the appellants were a significant point of contention. The Hon'ble High Court of Calcutta directed the Third Member to specifically address the issue of reduced penalties. The Third Member held that the penalties imposed under Section 114A and Section 112(a) of the Customs Act, 1962, were unwarranted. The appellants had classified the goods under Chapter Heading No. 2309.90 based on a favorable order from the Commissioner (Appeals) in their own case, which indicated a bona fide belief rather than an intent to evade duty. Consequently, the penalties were set aside.

3. Remand of the Matter to the Commissioner for Fresh Consideration:
The Third Member addressed whether the matter should be remanded to the Commissioner for fresh consideration regarding the imposition of penalties and the applicability of Notification No. 163/94. It was noted that Notification No. 163/94-Cus., dated 2-9-94, had been rescinded by Notification No. 47/96-Cus., dated 23rd July, 1996, and was not applicable during the disputed period (October 1998 to February 2001). Therefore, remanding the matter for reconsideration of the exemption under Notification 163/94 or for the imposition of penalties was deemed unnecessary.

Final Judgment:
The Tribunal, in its final order, confirmed the demand of duty against the appellants but set aside the penalties imposed upon them. The appeals were disposed of accordingly, adhering to the direction of the Hon'ble High Court and the findings of the Third Member. The Registry was directed to place the matter before the Hon'ble President, CESTAT, New Delhi, for necessary orders.

Conclusion:
The judgment addressed the confirmation of duty, the reduction and eventual setting aside of penalties, and the decision not to remand the matter for fresh consideration. The Tribunal concluded that the appellants' classification was based on a bona fide belief supported by a prior favorable order, thus negating the need for penalties. The final order confirmed the duty while setting aside the penalties, aligning with the directions from the Hon'ble High Court.