2013 (12) TMI 1456 - AT - Customs

Misdeclaration of goods - Whether in the facts and circumstances of the case, the provisions of Section 28(1A) of the Customs Act, 1962 are applicable or not - Difference of opinion - Majority order - Held that - Appellants are not disputing the fact that the goods were misdeclared by them in terms of description as well as in value. Section 111(m) of the Customs Act provides that the goods are liable for confiscation in case there is a misdeclaration by the importer. Once the goods are held to be liable for confiscation, the adjudicating authority is empowered to give option to the importer to redeem the goods under Section 125(1) of the Customs Act and the importer is also liable for penalty under Section 112(a) of the Act. The ratio of the decision in the case of Sonam Clock Pvt. Ltd. (supra) is not applicable on the facts of the present case, as the issue in the case of Sonam Clock Pvt. Ltd. was demand made under Section 11A of the Central Excise Act. There are no parallel provisions under the Central Excise Act as Section 111(m) of the Customs Act. - present case does not cover under the provisions of Section 28 of the Customs Act - Decided against assessee.

Summary

Issues Involved:
1. Misdeclaration of goods and their reclassification.
2. Applicability of Section 28(1A) of the Customs Act.
3. Imposition of redemption fine and penalty under Sections 125(1) and 112(a) of the Customs Act.

Detailed Analysis:

1. Misdeclaration of Goods and Their Reclassification:
The appellant filed a Bill of Entry for the clearance of Heavy Melting Scrap and Alloy Steel Scrap. Upon examination, the alloy steel scrap was found to be in the form of powder, contrary to the declaration. The goods were reclassified under CTH 7202 99 90, attracting a higher duty. The original adjudicating authority found the importer guilty of misdeclaration under Section 111(m) of the Customs Act and liable for penal action under Section 112(a). The appellant accepted the reclassification and revaluation, paying the reassessed duty and 25% of the penalty.

2. Applicability of Section 28(1A) of the Customs Act:
The appellant contended that having paid the reassessed duty and 25% of the penalty, the proceedings should abate under Section 28(1A). However, the Tribunal clarified that Section 28 pertains to demands made after goods have been assessed and cleared, whereas the present case involved reassessment under Section 17. Thus, Section 28(1A) was deemed inapplicable. The Tribunal emphasized that the reassessment was due to misdeclaration discovered during the examination, not a post-clearance demand.

3. Imposition of Redemption Fine and Penalty under Sections 125(1) and 112(a):
The adjudicating authority imposed a redemption fine of Rs. 6,00,000 and a penalty of Rs. 3,00,000. The appellant argued against these impositions, citing payment of the reassessed duty and penalty. The Tribunal, however, upheld the impositions, stating that once goods are confiscated under Section 111(m), the adjudicating authority must provide an option to redeem under Section 125(1) and impose a penalty under Section 112(a). The appellant's reliance on the Sonam Clock Pvt. Ltd. case was dismissed as irrelevant, given the different statutory contexts between Section 11A of the Central Excise Act and Section 28 of the Customs Act.

Separate Judgment by Member (Judicial):
A dissenting opinion was recorded by the Member (Judicial), who argued that the payments made by the appellant should be considered under Section 28(1A), thus concluding the proceedings. The Member highlighted that the payments were accepted by the department under Section 28(1A), and therefore, no further penalties or fines should be imposed. This view was supported by a C.B.E. & C. Circular and the legislative intent to reduce litigation through early settlement.

Majority Decision:
The matter was referred to a Third Member due to the difference of opinion. The Third Member agreed with the Member (Technical) that the provisions of Section 28(1A) were not applicable, as the reassessment was conducted under Section 17. Consequently, the appeal was dismissed, and the imposition of redemption fine and penalty was upheld.

Conclusion:
The Tribunal concluded that the appellant's argument for abatement of proceedings under Section 28(1A) lacked merit. The reassessment and impositions were justified under the relevant provisions of the Customs Act, given the misdeclaration of goods. The appeal was dismissed in line with the majority decision.