2005 (8) TMI 599 - AT - Customs

Summary

Issues:
1. Misdeclaration of goods and eligibility for concessional rate of duty under Notification No. 23/98.
2. Confiscation of imported goods under Section 111(m) and 111(o) of the Customs Act, 1962.
3. Penalty under Section 112(a) and 114A of the Customs Act, 1962.
4. Time bar issue for duty demands under Section 28 of the Customs Act, 1962.

Analysis:
1. The appellant sought clearance of 'Sheets of Nylon Tricot Flocking' under Notification 23/98, cus. dated 2-6-98 but was later issued a notice contending misdeclaration of goods and ineligibility for concessional duty. The adjudicator confirmed duty demand, confiscation of goods, and imposed penalties under various sections. However, the Tribunal found no misdeclaration in the goods description and that the duty demands were barred by limitation initiated in 1999. Therefore, the penalty under Section 114A and interest under Section 28AB were not upheld.

2. The Revenue argued that the goods were sold to a trader without the required end-use stipulation, leading to confiscation liability and denial of exemption. The Tribunal noted that the prevailing practice at the time of import allowed clearance of Nylon Tricot Flocking under the said notification without an end-use condition for 'Sheets'. As the goods were declared as 'Nylon Tricot Flock Sheets' and not 'Nylon Tricot Fabrics', the end-use condition violation was not established. Consequently, confiscation liability under Section 111(m) and 111(o) could not be upheld.

3. The penalties under Section 112(a) and 114A were challenged based on the findings related to misdeclaration and confiscation. Since the confiscation liability was not established, the penalty under Section 112 of the Customs Act, 1962 could not be upheld. Similarly, as the demands of duty were not upheld, the penalty under Section 114A and interest under Section 28AB were also not justified. The Tribunal set aside the order and allowed the appeals based on these findings.

4. The time bar issue for duty demands under Section 28 of the Customs Act, 1962 was raised, highlighting the proceedings initiated in 1999. The Tribunal found that the duty demands made were indeed barred by limitation, further supporting the decision to set aside the order and allow the appeals.