2013 (5) TMI 602 - AT - Customs

Penalties imposed u/s 112(a) - appellants charger for mid-declaration of the goods as synthetic polyester fabrics (100% non texturised) - Held that - No test was conducted on the impugned goods as the goods were assessed on the basis of test report of the Textile Committee. In these circumstances, the allegation of mis-declaration or suppression of facts, fraud are not sustainable against the assesses. When the allegation of mis-declaration or suppression of facts, fraud are not sustainable against the assesses, the extended period of limitation is not invokable. In this case, admittedly, the goods were assessed on 13.2.2003 and show-cause notice has been issued on 4.9.2003 which is beyond the normal period of limitation. Therefore, the impugned show cause notice is barred by limitation. As the proceedings against the assesses are barred by limitation, therefore, there is no question of demand of duty and penalties against the assesses. Thus set aside the impugned order and allow the appeals of the assesses.

Summary

Issues:
- Appeal against demand of duty, interest, and penalties under Sec. 112(a) of the Customs Act, 1962.
- Challenge of penalties imposed under Sec. 114A on the appellants.
- Validity of the impugned order and penalties imposed.
- Allegations of mis-declaration and suppression of facts.
- Application of the extended period of limitation.
- Consideration of test reports and assessment procedures.
- Bar on demand of duty and penalties due to limitation.

Analysis:
The case involved an appeal by M/s. Warren Trading Pvt.Ltd. against an order demanding duty, interest, and penalties under Sec. 112(a) of the Customs Act, 1962. Additionally, the Revenue challenged the penalties imposed on M/s. Warren Trading Pvt.Ltd. and another individual under Sec. 114A. The dispute arose from the mis-declaration of imported synthetic polyester fabrics as 100% non-texturised. The goods were examined, and a sample was sent to the Textile Committee Laboratory, which confirmed the misrepresentation. Subsequently, penalties were imposed, and the goods were confiscated but allowed to be redeemed upon payment of a fine. The Revenue contended that the penalties were incorrectly imposed under Sec. 112(a) instead of Sec. 114A, urging for a remand for fresh consideration.

During the proceedings, the appellants argued that the order was speaking, and the Commissioner had provided findings on the case's merits. They emphasized that the show cause notice was beyond the normal limitation period, and no allegations of fraud or suppression existed against them. The goods had been examined and assessed based on the test report, following Circular No. 23/2004-Cus. The appellants asserted that the extended limitation period was inapplicable since the goods were not further examined, leading to the proceedings being unsustainable against them.

Upon detailed examination, it was found that the goods were assessed based on the test report from the Textile Committee Laboratory, as per the Circular. The absence of further testing on the goods rendered the allegations of mis-declaration and suppression unsustainable. Moreover, the show cause notice issued beyond the normal limitation period was deemed barred by limitation. Consequently, the impugned order was set aside, and the appeals of the assesses were allowed, while the Revenue's appeal was dismissed.

In conclusion, the judgment addressed the issues of mis-declaration, suppression of facts, application of the limitation period, and the validity of penalties imposed under different sections of the Customs Act. The decision highlighted the importance of adherence to testing procedures and the implications of exceeding the limitation period in such cases.