2013 (6) TMI 470 - AT - Customs

Re-determination of total value of import - enhancement of declared value from USD 1.70 per kg. (CIF) to USD 2.42 per kg. (CIF) of imported R22 gas (an Ozone Depleting Substance) a single Hydro Chloro Flouro Carbon compound (HCFC) classifiable under Tariff Heading 2903 49 10 - confiscation of entire goods and allowed to redeem the goods on payment of redemption fine of Rs. 10 lakhs for the purpose of re-export and also imposed penalty on the appellant-company and Directors of company accordingly - Held that - Rule 10 of Ozone Depleting Substances (Regulation) Rules 2000 provides no person shall import or cause to import such ozone depleting substance unless he obtains licence issued by the authority. It is noted that R22 is a powerful greenhouse gas with a global warming potential 1810, and indicates that it is 1810 times as powerful as carbon-di-oxide, and this regulates as an additional environmental threat. In the present case, the appellant is a trader and imported R22 refrigerant gas without a licence and also not fulfilled the actual user condition and therefore, considering the larger environmental perspective, there is no need to accede the request of the appellant to release the goods for home consumption or ship stores. The attempt of the assessee that some item is available in the market and therefore this consignment R22 should be allowed for home consumption cannot be accepted. It is settled that the concept of equity cannot be pressed to commit another illegality. Also that the appellant took the plea before the Commissioner that they are able to procure the licence for import of R-22 but no licence was produced. The initial request of the appellant was to allow re-export which the adjudicating authority has allowed. Thus no merit in the appeals filed by the appellants. The Commissioner rightly allowed re-export upon payment of redemption fine and penalty. As Directors of the company and the appellant herein were involved for improper importation of goods and imposition of penalty under Section 112(a) of the customs Act, 1962 is justified. Accordingly, all the appeals filed by the appellants are dismissed and the adjudication order is upheld.

Summary

Issues Involved:
1. Mis-declaration of imported goods.
2. Denial of cross-examination request.
3. Legality of the importation of restricted substances.
4. Imposition of penalties and fines.

Detailed Analysis:

Mis-declaration of Imported Goods:
The appellant company imported five containers declared to contain HCFC R-401A refrigerant gas. However, upon investigation by DRI officers, it was found that the imported goods were actually R22 refrigerant gas, a restricted item. The adjudicating authority classified the goods under Tariff Heading 2903 49 10 of the Customs Tariff Act, 1975, and enhanced the declared value from USD 1.70 per kg. (CIF) to USD 2.42 per kg. (CIF), re-determining the total value of the goods to Rs.61,50,012/- (CIF). The goods were confiscated, and a redemption fine of Rs. 10 lakhs was imposed for re-export, along with penalties on the appellant-company and its directors.

Denial of Cross-examination Request:
The appellant disputed the report by Dr. R. Murugesan of IIT, Madras, and requested cross-examination, which was rejected by the adjudicating authority. The Tribunal noted that cross-examination is a valid right in quasi-judicial proceedings to establish the truth but is not an absolute right in all cases. Given the appellant's admission of the mis-declaration and the request for re-export, the Tribunal found no infirmity in the adjudicating authority's refusal to allow cross-examination, concluding that it would not violate principles of natural justice.

Legality of the Importation of Restricted Substances:
R-22 refrigerant gas is a restricted item under the EXIM Policy and the Montreal Protocol, which aims to phase out ozone-depleting substances. The import of such substances is permitted only by actual users against a specific license. The appellant, being a trader and not an actual user, imported R-22 without the necessary license, violating the Ozone Depleting Substances (Regulation and Control) Rules, 2000. The Tribunal emphasized the environmental threat posed by R-22 and rejected the appellant's plea to release the goods for home consumption or ship stores.

Imposition of Penalties and Fines:
The adjudicating authority imposed penalties on the appellant-company and its directors under Section 112(a) of the Customs Act, 1962. The Tribunal upheld these penalties, noting the involvement of the directors in the improper importation. The appellant's initial request for re-export was allowed by the adjudicating authority, and the Tribunal found this decision to be justified. The appeals filed by the appellants were dismissed, and the adjudication order was upheld.

Conclusion:
The Tribunal dismissed the appeals, upholding the adjudication order, which included the confiscation of goods, imposition of redemption fines, and penalties on the appellant-company and its directors. The decision emphasized compliance with environmental regulations and the legality of importation practices.