2009 (4) TMI 630 - AT - Customs

Summary

Issues:
1. Misdeclaration of imported fabrics.
2. Diversion of goods imported under previous Bills of Entry.
3. Confiscation of fabrics and imposition of penalties.
4. Application for waiver and stay of recovery of dues by appellants.
5. Application for waiver and stay of recovery of penalty by M/s. Navrang Shipping Pvt. Ltd.

Analysis:

1. Misdeclaration of imported fabrics: The fabrics imported by VINI were found to be misdeclared as 'knitted fabrics' instead of the actual 'woven fabrics'. The Commissioner of Customs confiscated 179 rolls of fabrics under Section 111(m) of the Customs Act, 1962, and demanded Rs. 8,48,867/- for ineligible exemption availed. A penalty of Rs. 3 lakhs was imposed on VINI for rendering the goods liable for confiscation. However, the appellate tribunal found that there was no willful misdeclaration, and the confiscation was not justified as the goods were intended for manufacturing readymade garments to fulfill the license conditions and exemption criteria.

2. Diversion of goods imported under previous Bills of Entry: The Commissioner found that goods imported under 16 Bills of Entry were diverted to unauthorized premises, violating licensing conditions. The tribunal noted that VINI had met 95% of the export obligation related to these imports, supported by shipping bills with the DEEC license number. The tribunal found the denial of exemption under Notification 94/04-Cus. unsustainable and ordered a waiver of the dues adjudged against VINI.

3. Confiscation of fabrics and imposition of penalties: The Commissioner demanded over Rs. 40 lakhs for exemption availed on fabrics imported earlier under 16 Bills of Entry and imposed penalties accordingly. The tribunal found the demand unsustainable as VINI had not knowingly misdeclared goods and had fulfilled export obligations. Therefore, the penalties imposed on VINI were deemed not sustainable, leading to a complete waiver of the dues adjudged against VINI.

4. Application for waiver and stay of recovery of dues by appellants: The appellants argued that they had not violated license conditions and had fulfilled export obligations. They provided evidence supporting their claims, including pending Export Obligation Discharge Certificate (EODC) from JDGFT. The tribunal found the appellants' claims credible and ordered a waiver of the dues adjudged against VINI pending the appeal decision.

5. Application for waiver and stay of recovery of penalty by M/s. Navrang Shipping Pvt. Ltd: M/s. Navrang Shipping Pvt. Ltd. applied for a waiver of the penalty imposed on them under Section 112(b) for their involvement in the transactions. The tribunal found that there was no evidence of conscious involvement by M/s. Navrang in any contravention of the law by VINI. Therefore, the tribunal ordered a waiver of the penalty pending the appeal decision.

In conclusion, the appellate tribunal granted waivers and stays on recovery of dues and penalties to VINI and M/s. Navrang Shipping Pvt. Ltd., respectively, based on the findings that the misdeclarations were not willful, export obligations were largely met, and there was no conscious involvement in contraventions of the law.