2008 (10) TMI 549 - AT - Customs

Summary

Issues:
Classification of imported goods under different tariff headings, imposition of fine in lieu of confiscation, imposition of penalty under Customs Act.

Classification of Goods:
The appellants imported goods declared as 'Potassium Clavulanate (Avicel Blend)' and 'Potassium Clavulanate (Syloid Blend)' under provisional assessment, pending final classification. The Department later classified the goods under Chapter 30 [Medicaments] instead of Chapter 29 [Organic Chemicals]. The appellants agreed to pay the differential duty. A show-cause notice was issued for recovery of differential duty, confiscation of goods, and penalty. The Commissioner reclassified the goods under CTH 30033900 and imposed a fine and penalty. The appeal contested the fine and penalty, arguing that misdeclaration was not attributable to the importer as the correct classification was accepted promptly by the assessee.

Imposition of Fine and Penalty:
The appeal challenged the imposition of a fine in lieu of confiscation and a penalty under Sections 111(m) and 112 of the Customs Act. The appellants argued that as the correct classification was promptly accepted by them, there was no misdeclaration or misclassification on their part. The Tribunal agreed with the appellants, noting that the goods were correctly classified by the Department, and misapplication of Section 111(m) led to the incorrect imposition of fine and penalty. As the penalty under Section 112 depended on confiscability, and since the goods were not liable for confiscation, the penalty imposed by the Commissioner was deemed unsustainable. Consequently, both the fine and penalty were vacated, and the appeal was allowed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, CHENNAI highlights the issues surrounding the classification of imported goods, the imposition of a fine in lieu of confiscation, and the penalty under the Customs Act. The Tribunal ruled in favor of the appellants, emphasizing that the correct classification accepted promptly by the assessee negated any misdeclaration or misclassification on their part, leading to the vacating of the fine and penalty originally imposed by the Commissioner.