2007 (8) TMI 594 - Commission - Customs

Issues Involved:
1. Misdeclaration of imported goods.
2. Evasion of customs duty.
3. Admissibility of duty liability by the applicant.
4. Legitimacy of past import assessments.
5. Examination of evidence and test reports.
6. Co-applicants' involvement and statements.
7. Procedural compliance by Customs.

Issue-wise Detailed Analysis:

1. Misdeclaration of Imported Goods:
The applicant was accused of importing packaging paper by misdeclaring it as "fruit grape guard packaging paper in sheet form coated with sodium meta bi sulphite" to avail concessional customs duty under Notification No. 21/2002-Cus. Investigations revealed that the test reports from both New Custom House Laboratory and Central Revenue Chemical Laboratory (CRCL) confirmed that the samples did not contain Sodium Meta Bi Sulphite, indicating fraudulent availing of duty exemption.

2. Evasion of Customs Duty:
The applicant had imported and cleared 35 consignments under the misdeclared description, evading customs duty amounting to approximately Rs. 40 lakhs. Further consignments were also found at Mumbai Docks, with a total duty evasion calculated at Rs. 44,95,757/- for 42 bills of entries.

3. Admissibility of Duty Liability by the Applicant:
The applicant admitted a total duty liability of Rs. 9,76,412/- against the demand of Rs. 44,95,757/-. The applicant's admission covered Rs. 7,83,619/- for goods seized and released provisionally and Rs. 1,92,793/- for two Bills of Entry from past imports.

4. Legitimacy of Past Import Assessments:
The applicant argued that the remaining 33 Bills of Entry were assessed finally and could not be reopened. The applicant contended that the test results of samples from a given consignment should not be applied retrospectively to other consignments.

5. Examination of Evidence and Test Reports:
The applicant presented an expert opinion that Sodium Meta Bi Sulphite decomposes under hot and humid conditions, which could explain the absence of Sodium Meta Bi Sulphite in the test results. However, the Revenue countered that samples were not drawn from every consignment due to standard customs procedures, and the test results from two Bills of Entry indicated misdeclaration.

6. Co-applicants' Involvement and Statements:
The co-applicant had roped in a jobless laborer to be the proprietor of the applicant firm, indicating an intention to evade duty. The co-applicant initially confessed that the imported paper was packaging tissue paper but later retracted the statement. The Revenue emphasized that the co-applicant's statement should be corroborated with other evidence.

7. Procedural Compliance by Customs:
The Revenue highlighted that not all consignments are tested routinely to ensure speedy clearance. The applicant's failure to admit duty liability for past imports, despite evidence of misdeclaration and payment of Rs. 39.5 lakhs as accepted duty before the Hon'ble Addl. CMM Court, indicated non-cooperation in the proceedings.

Conclusion:
The Commission concluded that the applicant did not make a full and true disclosure of duty liability and did not cooperate in the proceedings. Consequently, the case was sent back to the proper officer for further action under Section 127-I due to non-cooperation by the applicant in the Settlement Commission proceedings.

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