2013 (4) TMI 163 - HC - Customs

Classification of imported goods - Appeal is filed against the order passed by the CESTAT where tribunal set aside the confiscation, redemption fine and penalties imposed on the goods imported by the assessee even though the same were mis - declared and misclassified by the assessee Held that - There is no allegation that the assessee has colluded with the foreign supplier either in relation to the description of the goods or in relation to the valuation of the goods. It is relevant to note that even after the first test report, the Revenue could not arrive at a conclusion that the goods are classifiable under CTH 5801. It is only after the second test report the Revenue could arrive at a conclusion that the goods are classifiable under CTH 5801. It cannot be said that the assessee had misclassified the goods with an intention to evade payment duty. The decision of the Tribunal that there was no mala fide intention on the part of the assessee, even though the classification of the goods claimed by the assessee is not correct, it was not a case for confiscation/redemption cannot be faulted.

Summary

Issues:
- Justification of setting aside confiscation, redemption fine, and penalties imposed on misdeclared and misclassified imported goods by the assessee.

Analysis:
- The case involved the question of whether the CESTAT was justified in setting aside the confiscation, redemption fine, and penalties imposed on goods imported by the assessee, which were misdeclared and misclassified. The goods in question were initially declared as "Polyester Fabrics" but were later found to be "cut weft pile" fabrics called "corduroy" after testing by the Textile Committee. The adjudicating authority classified the goods under a different Customs Tariff Heading (CTH) and enhanced the value, leading to confiscation and penalties. The Tribunal set aside the initial order and remanded the matter for fresh adjudication. On fresh adjudication, the goods were again classified under a different CTH, and confiscation, redemption fine, and penalties were imposed. The assessee appealed, contesting the valuation and confiscation of the goods.

- The Tribunal, in its order, found that the enhancement in the value of the goods could not be sustained due to the absence of contemporaneous imports of similar goods. It also noted that the description of the imported goods in various documents was consistent, and therefore, the misdeclaration charge could not be upheld. The Tribunal ruled that the redemption fine and penalties imposed could not be sustained as confiscation was not justified. The Revenue challenged this decision, arguing that misdeclaration and misclassification warranted confiscation, redemption fine, and penalties.

- The Court analyzed the tariff headings relevant to the case and found that the goods imported by the assessee were different types of woven fabrics classified under distinct CTHs. There was no evidence to suggest that the misclassification was intentional to evade duty, nor was there any collusion with the foreign supplier. The Court highlighted that the Revenue could only determine the correct classification after the second test report. Since there was no significant price difference between polyester fabrics and corduroy, and no evidence of the assessee's awareness of the misclassification, the Court concluded that there was no mala fide intention to evade duty.

- Ultimately, the Court upheld the Tribunal's decision, stating that there was no fault in concluding that there was no mala fide intention on the part of the assessee in misdeclaring the goods. Despite the incorrect classification claimed by the assessee, the Court found no grounds for confiscation, redemption, or penalties. Therefore, the appeal was dismissed, and no costs were awarded.