2011 (3) TMI 1375 - Commission - Customs

Demand of differential duty under Section 28(1) of the Act from the applicant - information was gathered by CIU, JNCH that the applicant was misdeclaring the description of the imported goods. The information further disclosed that the said applicant had attempted to clear Secondary/Defective Cold Rolled Stainless Sheets Grade 201 by declaring the same as Prime in home consumption - applicants have admitted the charge of undervaluation as alleged in the SCN, applicants have admitted additional duty liability and have paid the same in true spirit of settlement, there had been a preplanning in the mis-declaration and undervaluation of the subject goods as alleged in the SCN, which has a bearing on imposition of penalty, differential Customs duty payable, amount stands paid by the applicant and confirmed by the Revenue, Since the duty was paid before the goods were cleared, interest is not applicable, immunities are granted under sub-section (1) of Section 127H of the Act. Attention of the applicants are also invited to the provisions of sub Section (2) and (3) of Section 127H ibid, order of settlement shall be void in terms of sub-section (8) of Section 127C of the Act

Summary

Issues involved:
Settlement application under Section 127B of the Customs Act, 1962 for misdeclaration of imported goods leading to differential duty demand.

Detailed Analysis:

1. Factual Background:
The case involved M/s. Honest Enterprises Ltd., a trading firm importing stainless steel products. The Customs Intelligence Unit (CIU) discovered misdeclaration in the imported goods, specifically Secondary/Defective Cold Rolled Stainless Sheets Grade 201 being declared as 'Prime.' The firm failed to submit an independent examination report, leading to an investigation revealing the misdeclaration.

2. Legal Proceedings:
The Commissioner of Customs issued a Show Cause Notice demanding differential duty. The applicant admitted the liability and paid the duty during the investigation stage. The Settlement Commission considered the case for settlement under Section 127B of the Act.

3. Arguments Before the Commission:
The applicant sought settlement, admitting the duty liability and requesting immunity from fines, penalties, and prosecution. The applicant's advocate highlighted the cooperation during the investigation and settlement proceedings, emphasizing the classification dispute rather than valuation.

4. Revenue's Position:
The Revenue representatives did not object to settlement but suggested imposing suitable fines and penalties. They highlighted the expenses incurred due to the misdeclaration and requested penalty imposition despite acknowledging the duty payment.

5. Settlement Terms:
The Settlement Commission acknowledged the full disclosure by the applicants and their cooperation. It settled the Customs duty at Rs. 4,94,214, imposed a fine of Rs. 15,000 in lieu of confiscation, and granted immunity from penalties exceeding Rs. 10,000. The Commission also granted immunity from prosecution under the Customs Act, 1962.

6. Final Orders:
The Settlement Commission provided detailed terms and conditions for settlement, including the discharge of bonds and bank guarantees post-payment, and highlighted the possibility of voiding the settlement if obtained through fraud or misrepresentation.

7. Conclusion:
The Settlement Commission granted immunity based on the applicants' cooperation and full disclosure, settling the duty amount and imposing a fine while providing protections against prosecution. The order emphasized the importance of truthful disclosure and cooperation in settlement proceedings.

This detailed analysis covers the key aspects of the judgment, including the factual background, legal proceedings, arguments presented, settlement terms, and the final orders issued by the Settlement Commission.