2014 (9) TMI 1107 - AT - Customs

Natural justice - Misdeclaration of imported goods - cut and polished diamonds - the adjudicating authority has come to the conclusion that the 997.09 carats of diamonds seized are substituted diamonds and not the original diamonds imported by the appellants - Held that - the seized goods are still available with the department and, therefore, the request of the appellant for re-testing of the diamonds should have been allowed - The appellant is also seeking re-test by a member of the panel approved by the department and this request is a reasonable one. Therefore, rejection of the request for retesting tantamount to violation of principles of natural justice. The department also maintains records of imports undertaken by the various importers and, therefore, the department should have verified from their own records, before rejecting the documents submitted by the appellants. If it is found on such verification that the details given by the appellants are incorrect, a specific finding to that effect should have been recorded. This has not been done in the present case. This also constitutes another violation of the principles of natural justice. The seized goods which are available with the department shall be re-tested by any member of the approved panel from the departments list so as to establish the identity of the seized diamonds with respect to cut, clarity and caratage - appeal allowed by way of remand.

Summary

Issues:
Confiscation of imported diamonds, substitution of diamonds, duty demand on imported goods, penalties imposed under Customs Act, violation of principles of natural justice, appeal for re-testing of seized goods, rejection of evidence by adjudicating authority, remand for denovo consideration.

Confiscation of Imported Diamonds:
The judgment involves an appeal against the confiscation of cut and polished diamonds imported by the appellant, allegedly found short in their stock under various sections of the Customs Act. The adjudicating authority ordered confiscation of the diamonds, along with goods clandestinely removed from the premises, and imposed duty demands and penalties on the importer and related individuals.

Substitution of Diamonds:
The appellant contested the substitution claim, arguing that the seized diamonds were not substituted but original imports. The appellant sought re-testing of the diamonds by an approved panel member, which was denied, leading to a violation of natural justice. The appellant provided bills of entries and accounts, which the adjudicating authority rejected for lack of attestation, without verifying the department's own records, constituting another violation of natural justice.

Duty Demand and Penalties:
The adjudicating authority confirmed duty demands on the replaced diamonds and diverted capital goods, imposing significant penalties on the importer, managing director, and employees under various provisions of the Customs Act. The appellant challenged the rejection of evidence and denial of re-testing, emphasizing the department's responsibility to establish its case with proper documentation.

Violation of Principles of Natural Justice:
The appellant argued that the denial of re-testing and rejection of evidence without verification from department records constituted violations of natural justice. The Tribunal agreed, remanding the matter for denovo consideration, directing re-testing of seized goods by an approved panel member and verification of import details from department records.

Remand for Denovo Consideration:
The Tribunal allowed the appeals by remanding the matter back to the adjudicating authority for denovo consideration. It directed re-testing of seized goods, verification of import details from department records, and completion of adjudication proceedings within three months, emphasizing cooperation between the appellants and the department for an expeditious resolution.