2017 (2) TMI 1312 - AT - Customs

Mis-declarartion of goods - Confiscation - adverse report - appellant says that a very small sample taken from the first lot had resulted adverse inference against the appellant for which the second lot test report should be utilised in respect of the first lot cleared provisionally - Held that - It is common sense that test result is applicable in respect of a lot from which sample is taken but not to any other lot. The test result of the first lot of consignment proved the nature and character of the goods therein - The sample taken from the first lot of goods provisionally released, resulted in adverse report against the appellant. There is no prayer of the appellant to the authority to re-test the samples thereof if the appellant had doubt. In absence of any such prayer, no plea of use of test report of second lot of consignment against first lot of consignment is untenable. Not only duty is imposable but mis-declared goods become smuggled goods under Section 2(39) of the Customs Act, 1962 for which that was liable to confiscation and penalty. Appeal dismissed.

Summary

Issues:
1. Import of goods declared as non-alloy heavy metal scraps
2. Provisional assessment under Section 18 of the Customs Act, 1962
3. Discrepancy in laboratory test results for two consignments
4. Applicability of test results to different consignments
5. Allegation of misdeclaration under DFRC scheme
6. Use of test report of second lot for first lot clearance
7. Classification of goods and imposition of duty

Analysis:
1. The appellant imported two consignments of goods declared as non-alloy heavy metal scraps. The first consignment underwent provisional assessment under Section 18 of the Customs Act, 1962, with samples taken for laboratory testing. The test results were unfavorable for the appellant.

2. The second consignment was also subjected to laboratory testing at the appellant's request, and the report favored the appellant. The appellant argued that since the second lot's test report was favorable, it should be used to rectify the adverse inference from the first lot's test report.

3. The revenue contended that the appellant misdeclared the goods to exploit the law under the DFRC scheme. They argued that the unfavorable test report for the provisionally cleared first lot should not be overridden by the favorable report of the second lot. The law does not permit the use of test results from one lot to rectify another lot's misdeclaration.

4. The Tribunal heard both sides and emphasized that test results are specific to the lot from which samples are taken. The test report of the first lot determined the nature and character of the goods therein. Provisional assessment is a method used when certainty about goods' classification is lacking. In this case, the adverse test report from the first lot stands, as there was no request for re-testing or doubt expressed by the appellant.

5. The Tribunal concluded that the executive action was carried out in good faith, and the adverse test report must be applied to the first lot. Consequently, the appellant's claim of the goods being non-alloy heavy metal scrap was rejected. The misdeclared goods were deemed smuggled under Section 2(39) of the Customs Act, leading to confiscation and penalties.

6. Therefore, the appeal was dismissed, and the Tribunal upheld the imposition of duty on the misdeclared goods. The judgment serves as a reminder of the importance of accurate declaration and the consequences of misdeclaration under customs laws.