2009 (5) TMI 792 - AT - Customs

Confiscation - Misdeclaration of goods - Held that - the Commissioner is right in holding the goods covered by bill of entry 340 as pipes falling under 7304.39. The denial of the benefit of exemption notification No. 16/2000 dated 1-3-2000 for the goods covered by the above bill of entry is also legal and proper. It has to be accepted. With regard to other goods covered by bills of entry No. 79 and 177 they had already been cleared by the Customs. The main allegation is that the said goods ought to have been unloaded only at the final destination in the A. P. and the evidence shows that they had been unloaded at Bangalore - Held that - the Adjudicating Authority has not allowed the cross-examination of the drivers and the surveyor. In our view, this is violation of principles of natural justice. Sufficient opportunity has not been given to the appellant for defending their case - We also take note of the appellants contention that the trucks with the containers could not pass through the narrow roads and consequently, they were compelled to unload the goods at Bangalore and carry them to the factory in other lorries. There is also no evidence of the appellant having received the melting scrap from other sources. In view of this lacuna in investigation, we have to give the benefit of doubt to the appellants. Appeal allowed in part.

Issues Involved:
1. Classification and valuation of imported goods.
2. Misdeclaration of goods and subsequent legal implications.
3. Denial of exemption under Customs Notification.
4. Procedural lapses and principles of natural justice.
5. Imposition of penalties and fines.

Issue-wise Detailed Analysis:

1. Classification and Valuation of Imported Goods:
The appellants filed a bill of entry for clearance of non-alloy steel re-melting scrap under Customs Tariff Heading 7204.49. However, upon examination, the goods were found to be pipes of various dimensions. The Commissioner classified the goods under Tariff Heading No. 7304.39 and confirmed demands amounting to Rs. 31,21,470/-, Rs. 6,84,496/-, and Rs. 19,87,356/- for three different bills of entry. The Commissioner determined the valuation using the best judgment method, setting the market value at Rs. 30,000/- per Mt and the assessable value at Rs. 14,962/- per Mt.

2. Misdeclaration of Goods and Legal Implications:
The goods declared as HMS scrap were found to be pipes, leading to a charge of misdeclaration. The goods were examined by the Manager of Kerala Electrical and Allied Engineering Company and licensed surveyors, who confirmed the goods were pipes, not suitable for melting in furnaces. Consequently, the Commissioner held the goods liable for confiscation under Sections 111(l), 111(m), and 111(o) of the Customs Act, 1962, and imposed a redemption fine of Rs. 10 lakhs.

3. Denial of Exemption under Customs Notification:
The appellants claimed the benefit of Customs Notification No. 16/00 and No. 34/97, which was denied as the goods were assessed as pipes and not as scrap. The denial was upheld as legal and proper since the goods were misdeclared and classified correctly under a different tariff heading.

4. Procedural Lapses and Principles of Natural Justice:
The appellants argued that the adjudication order did not consider various contentions and case laws cited in their reply to the show cause notice. They also contended that the end-use certificate from the jurisdictional Dy. Commissioner of Central Excise should be binding. The Tribunal noted that the adjudicating authority did not allow cross-examination of key witnesses, violating principles of natural justice. The Tribunal emphasized that suspicion alone cannot replace evidence, and the onus was on the Revenue to prove diversion of goods.

5. Imposition of Penalties and Fines:
Penalties were imposed on M/s. Triveni Steels Pvt. Ltd. and its Managing Director under Sections 114A and 112 of the Customs Act, 1962. The Tribunal reduced the penalty on M/s. Triveni Steels Ltd. to Rs. 19,87,356/- and on Shri A.V. Subba Reddy to Rs. 10,000/-. The Tribunal also reduced the redemption fine to Rs. 2,00,000/- considering the facts and circumstances of the case.

Conclusion:
The Tribunal upheld the classification and valuation of the goods covered by bill of entry 340 as pipes, confirming the short levy and interest. However, for goods covered by bills of entry 79 and 177, the Tribunal dropped further proceedings due to insufficient evidence of diversion and procedural lapses in the investigation. The appeals were disposed of with modifications to penalties and fines, ensuring adherence to principles of natural justice.

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