2010 (8) TMI 422 - AT - Customs

Investigation - Scrutiny - Confiscation - Evasion of duty - Penalty - Restricted items for import under the Import Policy - Demand of differential duty - according to the Revenue, the complete article (radio cassette recorder or rechargeable light) was imported in CKD/SKD condition fraudulently with intent to get over licensing provisions of the relevant Import Policy as also to evade payment of duty - Held that - the respondents committed breach of para 15.2A of the Exim Policy 1997-2002 by importing consumer goods, viz., radio cassette recorders and rechargeable lights without import licence - the extended period of limitation is invocable in this case - it is also not open to the respondents to argue that no penalty is liable to be imposed on them under Section 114A of the Customs Act, as the legal requirements for a penalty under this provision are the same as the legal requirements to be established for invoking the extended period of limitation under Section 28(1) of the Act - The appeals are disposed of by way of remand for the limited purpose of quantifying the correct amount of duty to be paid by the respondents and determining the penalty to be imposed on them under Section 114A of the Act

Issues Involved:
1. Alleged fraudulent importation of restricted items in CKD/SKD condition.
2. Misdeclaration and evasion of customs duty.
3. Invocation of the extended period of limitation.
4. Liability for confiscation and penalties under Sections 111, 112, and 114A of the Customs Act.

Issue-wise Detailed Analysis:

1. Alleged Fraudulent Importation of Restricted Items in CKD/SKD Condition:
The department alleged that the respondents, M/s. Electronic Instrumentation and M/s. Videomax Electronics, imported components of radio cassette recorders (RCRs) and rechargeable lights (RCLs) in CKD/SKD condition without the required import licenses, violating the Import Policy. The components were imported over a period from April 1997 to February 1998 and were declared as individual parts to evade restrictions on importing complete consumer goods. The show-cause notice detailed how components from different Bills of Entry were grouped to form complete RCRs and RCLs, which were restricted items under the Import Policy.

2. Misdeclaration and Evasion of Customs Duty:
The respondents were accused of misdeclaring the imported goods as individual components rather than complete articles to evade higher customs duties. The investigation revealed that the components imported by the husband (Electronic Instrumentation) and the wife (Videomax Electronics) were intended to be assembled into complete RCRs and RCLs. Statements recorded under Section 108 of the Customs Act confirmed that the respondents imported these items without licenses and with the intent to evade duty.

3. Invocation of the Extended Period of Limitation:
The show-cause notice invoked the extended period of limitation under the proviso to sub-section (1) of Section 28 of the Customs Act, alleging that the respondents willfully suppressed material facts to evade duty. The respondents contested the demand on the grounds of limitation, arguing that the imports were lawful and the duty assessed was paid. However, the tribunal found that the respondents' deliberate misdeclaration and subterfuge justified invoking the extended period.

4. Liability for Confiscation and Penalties:
The tribunal held that the goods were liable for confiscation under Section 111(d) and (m) of the Customs Act due to misdeclaration and importation without the required licenses. The respondents were also liable for penalties under Section 114A for evading customs duty. However, Section 111(o) was not applicable. The tribunal set aside the Commissioner's order dropping the charges and remanded the case for quantifying the correct duty and determining penalties, emphasizing that no penalty under Section 112 should be imposed due to the fifth proviso to Section 114A.

Conclusion:
The tribunal concluded that the respondents committed a breach of the Import Policy by importing restricted items in CKD/SKD condition without licenses and evaded customs duty through misdeclaration. The extended period of limitation was validly invoked, and the goods were liable for confiscation with penalties under Section 114A. The case was remanded to the Commissioner for quantification of duty and determination of penalties, with specific instructions regarding the seized goods and redemption fine.

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