2012 (10) TMI 385 - AT - Customs

Demand of duty import of goods from Nepal - importer had claimed exemption under Notification 40/2002-Cus., - goods were intercepted by Directorate of Revenue Intelligence and seized under the belief that the importer had mis-declared the goods in the Bill of Entry for claiming the exemption under Notification 40/2002-Cus., - alleged that exemption under Notification 40/2002-Cus. was meant for goods of Napalese origin; the goods imported were pure Calcium Di-Pantothenate, classifiable under Customs Tariff Heading 29.36 and the goods were imported from Germany Held that - Case of the department is proved based on test reports - When the goods were available for testing and were tested and found to be different from what was declared, the appellant was just trying to avoid coming before the department - His agent was accepting that the certificate was forged - department did not make enquiries with the Nepal Chamber of Commerce which is stated to have issued the certificate is not a major flaw in investigation - no need for any joint visit by the Indian Customs and Napalese Customs to the factory of the exporter to find out the correctness of the certificate issued Whether goods could have been confiscated absolutely alleged that goods were prohibited goods and liable to confiscation under 111(d) of the Customs Act Held that - Goods in question is not of a type which causes injury to public health or can cause damage or threat to the society if released into Indian market - goods have been sold by the Customs in Indian market - goods should have been released to the importer against a redemption fine rather than the customs department selling the goods after absolute confiscation. Value of the goods - Appellants have raised the objection that the basis for such assessment is not disclosed in the SCN or in the order-in-original - When the description was wrong the value declared cannot be accepted Penalty Held that - Penalty imposed on the firm is about 45% of the assessed value of seized goods - Considering that goods were absolutely confiscated, and the relief from such order is being granted only after more than 8 years, and thus the appellant has suffered severe penal consequence we reduce the penalty

Summary

Issues Involved:
1. Admissibility of Miscellaneous Application 709/2009.
2. Mis-declaration of imported goods and eligibility for exemption under Notification 40/2002-Cus.
3. Jurisdiction of DRI to issue notice.
4. Validity of test reports and sample collection.
5. Confiscation of goods and imposition of penalties.
6. Compliance with Indo-Nepal Treaty and Notification No. 9/96-Cus.(N.T.).

Issue-wise Detailed Analysis:

1. Admissibility of Miscellaneous Application 709/2009:
The Miscellaneous Application 709/2009 was dismissed as it was not listed for hearing, and there were no arguments regarding its admission. The application intended to introduce certain technical literature relevant to the nature of the goods, but the tribunal found it insignificant since the goods were no longer available for further testing and tests had already been conducted by competent authorities.

2. Mis-declaration of Imported Goods and Eligibility for Exemption under Notification 40/2002-Cus:
The primary appellant imported goods from Nepal, declaring them as "Poultry Feed Supplement AV-107" and claimed exemption under Notification 40/2002-Cus. The Directorate of Revenue Intelligence (DRI) intercepted and seized the goods, alleging mis-declaration to fraudulently claim exemption. The DRI argued that the goods were pure Calcium Di-Pantothenate from Germany, not processed in Nepal, and thus not eligible for the exemption. The tribunal upheld the department's case based on multiple test reports confirming the goods were pure Calcium Di-Pantothenate and not "Poultry Feed Supplement AV-107."

3. Jurisdiction of DRI to Issue Notice:
The appellant contested the jurisdiction of DRI to issue the notice. However, this issue was resolved by the retrospective amendment in Section 28 of the Customs Act, 1962, brought about by the Customs (Amendment and Validation) Act, 2011.

4. Validity of Test Reports and Sample Collection:
The appellants challenged the validity of the test reports, arguing that samples were not drawn in their presence and that the DRI officers lacked the authority to test the goods. The tribunal dismissed these objections, noting the appellant's non-cooperation during the investigation and the reliability of the test reports from multiple laboratories, which consistently identified the goods as pure Calcium Di-Pantothenate.

5. Confiscation of Goods and Imposition of Penalties:
The goods were absolutely confiscated, and penalties were imposed on several individuals and the firm. The tribunal found the absolute confiscation unjustified as the adjudicating authority did not record reasons for not offering an option to pay a fine in lieu of confiscation. The tribunal ordered the adjudicating authority to determine the redemption fine and calculate the duty payable. Penalties on individuals were reassessed, reducing the penalties on the firm and individuals involved while setting aside penalties on others.

6. Compliance with Indo-Nepal Treaty and Notification No. 9/96-Cus.(N.T.):
The appellants argued that the goods were covered by a certificate of origin from the Nepalese Chamber of Commerce and that the customs authorities should have verified this with the Nepalese government. The tribunal found that the certificate of origin was forged, and the goods did not meet the conditions of Notification 40/2002-Cus., as no substantial manufacturing process occurred in Nepal. The tribunal also noted that the Indo-Nepal Treaty provisions were not followed due to the appellant's non-cooperation.

Conclusion:
The tribunal upheld the department's case regarding the mis-declaration and ineligibility for exemption under Notification 40/2002-Cus. The absolute confiscation was deemed improper, and the matter was remitted to the adjudicating authority to determine the appropriate redemption fine and duty payable. Penalties on the firm and individuals were reassessed, providing partial relief to the appellants.