2009 (1) TMI 616 - AT - Customs

Summary

Issues:
1. Waiver of pre-deposit of Customs duty and penalty.
2. Misdeclaration of goods to avail exemption benefit.
3. Validity of duty demand and penalty imposition.
4. Applicability of judicial precedents on duty demand under Section 28 of the Customs Act.

Issue 1: Waiver of pre-deposit of Customs duty and penalty
The appellant sought waiver of pre-deposit of Rs. 7,07,025/- being Customs duty on imports of 'Varistots' and penalty of Rs. l lakh. The Commissioner found that the appellants had misdeclared the goods to avail inadmissible benefits under an exemption notification. The appellant argued that duty could not be demanded without challenging the assessment in the Bills of Entry and that no penalty should be imposed due to a dispute over correct classification. The JDR contended that misdeclaration was deliberate, justifying duty demand and penalty. The Tribunal held that a pre-deposit of Rs. 3.5 lakhs was required, with the balance dues subject to waiver pending appeal decision.

Issue 2: Misdeclaration of goods to avail exemption benefit
The appellant, a State Government Undertaking, imported goods misdeclared as 'coated silver disc for resistors' to avail duty exemption under a notification. The goods were actually varistors not covered by the exemption. The Commissioner found wilful misdeclaration, leading to duty demand and penalty imposition. The Tribunal noted that the importers were aware of the correct goods but declared them incorrectly to benefit from the exemption. The misdeclaration misled assessing authorities, and the goods were not examined thoroughly during clearance.

Issue 3: Validity of duty demand and penalty imposition
The Commissioner invoked Section 28 of the Customs Act to demand duty on the misdeclared goods and imposed a penalty under Section 112(a) of the Act. The appellant argued against the validity of the demand and penalty, citing lack of challenge to finalized assessments and absence of wilful misdeclaration. The JDR supported the Commissioner's decision, asserting that the duty demand and penalty were legal and justified. The Tribunal upheld the duty demand and penalty, requiring a pre-deposit and granting waiver of the balance pending appeal decision.

Issue 4: Applicability of judicial precedents on duty demand under Section 28 of the Customs Act
The appellant relied on judicial authorities to argue that duty demand under Section 28 required successful challenge of finalized assessments. However, the Tribunal found the cited precedents inconsistent with a Supreme Court judgment upholding duty demand through a Show Cause Notice under Section 28 without revising the assessment order. Considering the wilful misdeclaration in this case, the Tribunal deemed the duty demand and penalty imposition appropriate, rejecting the appellant's challenge against the impugned order.

This detailed analysis of the judgment covers the issues of waiver of pre-deposit, misdeclaration of goods, validity of duty demand and penalty imposition, and the applicability of judicial precedents, providing a comprehensive understanding of the legal aspects involved in the case.