2008 (8) TMI 747 - AT - Customs

Summary

Issues:
Classification of imported fabrics under different sub-headings, valuation of goods, imposition of penalty, imposition of redemption fine.

Classification Dispute:
The case involved a dispute over the classification of imported fabrics - 17244 yards of "Polyester Knitted and Woven Fabric." The Revenue sought to classify the goods as "Pile Fabrics of Polyester" under sub-heading 6001.92, while the Respondents claimed classification under sub-heading 6002.43 as "Warp Knit Polyester Fabrics." The Chemical Examiner's reports indicated that some samples were "knitted cut pile fabrics of polyester" and some were "printed knitted fabrics." The Tribunal found that the fabrics were correctly classifiable under sub-headings 6001.92 and 6002.43 based on the test reports, leading to the rejection of the Revenue's duty demand.

Valuation Issue:
The value of the fabrics held to be polyester knitted pile fabrics was revised by the Revenue without providing a basis for the revision. The Tribunal noted that the Respondents were not asked to show cause for the enhancement of the assessable value, rendering the Joint Commissioner's order unsustainable. The Tribunal upheld the dropping of the duty demand related to the enhanced assessable value, emphasizing the lack of disclosure regarding the basis for the enhancement.

Imposition of Penalty and Redemption Fine:
The fabrics found to be misdeclared as knitted polyester fabrics but classified as knitted pile fabrics were held liable for confiscation under Section 111(m) of the Customs Act. Despite not being physically available for confiscation, they were deemed liable for redemption fine as per legal precedent. The Respondents were also found liable for penalty under Section 112(a) for misdeclaration. The Tribunal remanded the matter for quantifying the duty demand, determining the redemption fine, and penalty amount.

Conclusion:
The Tribunal upheld the Commissioner of Customs (Appeals) order regarding the valuation of fabrics but set aside the classification decision. It directed the quantification of duty demand and redetermination of redemption fine and penalty. The Revenue's appeal and the Respondents' cross-objection were disposed of accordingly.